Market Report
Russian Automotive Market: Passenger Cars, Components and Spare Parts
2006 - 2010
June 2007
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Table of Contents
TABLE OF CONTENTS ...... 2
TABLE OF FIGURES ...... 4
1 SUMMARY ...... 6
2 COUNTRY BASICS ...... 9
2.1 Economic Development ...... 10
2.2 Comparison with European Union ...... 12
2.3 Regional Economic Development ...... 14
3 RUSSIAN PASSENGER CAR MARKET ...... 18
3.1 Russian Car Parc ...... 18 3.1.1 Structure of Car Parc by Age ...... 19 3.1.2 Structure of Car Parc by Models ...... 20 3.1.3 Car Parc in Regional Markets ...... 23 3.1.3.1 Passenger Car Parc of Moscow ...... 25 3.1.3.2 Passenger Car Parc of St. Petersburg ...... 27 3.1.3.3 Passenger Car Parc of Krasnodar Region ...... 28 3.1.3.4 Passenger Car Parc of Kaliningrad Region ...... 28 3.1.3.5 Passenger Car Parc of Primorskiy Region ...... 29 3.1.3.6 Passenger Car Parc of Novosibirsk Region ...... 30 3.1.3.7 Passenger Car Parc of Rostov Region ...... 31
3.2 Passenger Car Sales and Imports ...... 32 3.2.1 Size of Market ...... 32 3.2.2 Sales Drivers ...... 39 3.2.2.1 Car Loans ...... 39 3.2.2.2 Local Production Projects of Foreign Car Makers ...... 40 3.2.2.3 Dealership Networks / Distribution Systems ...... 44 3.2.2.4 Consumer Preferences ...... 50
4 RUSSIAN COMPONENTS AND SPARE PARTS MARKET ...... 53
4.1 Market Size for Components and Spare Parts ...... 53 4.1.1 Primary Market ...... 53 4.1.2 Secondary Market ...... 58
4.2 Distribution System for Spare Parts ...... 63
4.3 Consumer Behaviour Regarding Car Service and Spare Parts ...... 70
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 5 APPENDICES ...... 73
5.1 Districts and Regions in Russia ...... 73
5.2 Population and Area in Regions ...... 74
5.3 Major Russian Cities ...... 77
5.4 Regions by Level of Economic Development ...... 82
5.5 Regional Passenger Car Parcs ...... 84
5.6 Custom Regulation for Car Imports ...... 88 5.6.1 New Cars ...... 88 5.6.2 Second-hand Cars ...... 88 5.6.3 Non-Compliance with Euro 2 Norm ...... 89
5.7 Sales of Foreign Brands in Russia, 2005-2007 ...... 90
5.8 Sales by Car Models Q1 2006 to Q1 2007 ...... 92
6 ABBREVIATIONS ...... 94
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Table of Figures
Figure 1: Russia - Country Facts, 2007 ...... 9 Figure 2: Russian Federal Districts ...... 10 Figure 3: Population development, in 1.000, 2005-2009...... 10 Figure 4: Development of Nominal GDP, USD bn., 2004-2010 ...... 11 Figure 5: Development of GDP Growth Rates, Change in % to Previous Year, 2001-2010 ...... 11 Figure 6: Development of Real Income / Capita, in Rouble, 2000-2010 ...... 12 Figure 7: Comparison of Key Figures EU / Russia, 2006 ...... 13 Figure 8: Share of Leading Regions in Total GDP, 2006 ...... 15 Figure 9: Income per Capita in Regions, 2006 ...... 16 Figure 10: Growth of Retail Expenditures per Capita, 2006-2009 ...... 17 Figure 11: Leading Regions by Share in Total Volume of Retail Trade, 2006 ...... 17 Figure 12: Development of Passenger Car Parc, Total and Foreign, in mio., 1993-2010* ...... 18 Figure 13: Passenger Car Sales in Russia and Selected European Countries, 2005-2010 ...... 19 Figure 14: Structure of Russian Car Parc by Age in 2006 ...... 20 Figure 15: Top-Ten Brands in Russian Car Parc, 2006 ...... 21 Figure 16: Car Parc of Foreign Brands in Russia, in 1.000, 2007 ...... 22 Figure 17: Popular Models among Foreign Brands in Russia, 2007 ...... 23 Figure 18: Passenger Car Parcs of Federal Districts, 2006 ...... 24 Figure 19: Rating of Regional Car Parcs by Number of Vehicles, 2006 ...... 25 Figure 20: Moscow Car Parc: Top 10 Foreign Brands, in 1.000, 2006 ...... 26 Figure 21: St. Petersburg Car Parc: Top 10 Foreign Models, in 1.000, 2005...... 27 Figure 22: Krasnodar Region Car Parc: Top 10 Foreign Models, in 1.000, 2006 ...... 28 Figure 23: Kaliningrad Car Parc: Top 10 Foreign Brands, in 1.000, 2005 ...... 29 Figure 24: Primorskiy Region Car Parc: Top 10 Foreign Brands, in 1.000, 2006 ...... 30 Figure 25: Novosibirsk Car Parc: Top 10 Foreign Brands, in 1.000, 2005 ...... 31 Figure 26: Rostov Car Parc: Top 10 Foreign Brands, in 1.000, 2005 ...... 32 Figure 27: Relative Sales and Import Structure of Car Market, 2002-2010 ...... 33 Figure 28: Sales and Import Structure of Car Market, 2002-2010 ...... 34 Figure 29: New Car Sales: Foreign and Domestic Brands, 2002-2010 ...... 35 Figure 30: Sales of Foreign Car Brands, 2005, 2006, Q1 2007 ...... 37 Figure 31: Sales of Foreign Car Models, 2005-2006 ...... 38 Figure 32: Cars Bought on Credit, in 1.000, 2003–2007 ...... 40 Figure 33: Production of Foreign Car Brands in Russia, in 1.000, 2005-2006 ...... 42 Figure 34: Planned Local Production for Foreign Cars in Russia up to 2010 ...... 43 Figure 35: Largest Dealership Networks of Foreign Brands in Russia, 2005-2007 ...... 45 Figure 36: Dealer Centers Opened in the Third Quarter of 2006 ...... 47 Figure 37: Major Russian Automobile Dealer Companies ...... 48 Figure 38: Selected Second-Hand Car Dealers in Russia ...... 49 Figure 39: Key Criteria Influencing Car Choice in Russia, Single-Choice ...... 51 Figure 40: Car Buyer’s Preferences Depending on Income Size ...... 52 Figure 41: Automotive Parts Market for Russian and Foreign Brands, USD bn., 2002-2010 ...... 54 Figure 42: Major Russian Component Suppliers ...... 56 Figure 43: Foreign Component Supplier Projects in Russia ...... 57 Figure 44: Size of Russian Spare Parts Market, USD bn., 2006-2010...... 61 Figure 45: Spare Parts for Foreign Cars: Top-6 Positions, USD mio., 2006-2010 ...... 61 Figure 46: Market for Brake Shoes, Foreign & Russian, USD mio., 2006-2010 ...... 62 Figure 47: Market for Shock Absorbers, Foreign & Russian, USD mio., 2006-2010 ...... 62 Figure 48: Distribution System for Spare Parts in Russia ...... 63 Figure 49: Pricing of Service Centers on Selected Services, 2006 ...... 64
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Figure 50: Large Spare Parts Importers and Wholesalers in Russia ...... 66 Figure 51: Chains of Independent Service Centers in Russia ...... 67 Figure 52: Where Russians Buy Spare Parts, 2006 ...... 69 Figure 53: Where Russians Get Their Foreign Car Repaired, 2006 ...... 69 Figure 54: Consumer Preferences: Original or Independent Aftermarket Spare Parts, 2006 ...... 70 Figure 55: Monthly Expenditures on Car Repair and Maintenance, 2006 ...... 71
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 1 Summary
Russia is, with a population of over 140 mio., a large attractive market, measured by the number of potential consumers. With a nominal GDP per capita of 6.854 USD in 2006, growing at almost 7% annually, consumers are able to make investments on a constantly increasing scale. The automotive market is one of the most eye-catching sectors to reflect these positive trends.
The consumer potential together with increasing income makes Russia today one of the most attractive markets for the world automotive industry. Already by 2009, Russia is going to overtake Germany in terms of new cars sold, and most of the vehicles will be of foreign origin. 2006 became the first year in which Russians bought more foreign cars than those of domestic brands. New car sales reached 1,8 mio. in 2006 – a huge increase from less than 1 mio. in 2002 – and will contin- ue to grow at a rate of 21% until 2010. This rapid development is, apart from grow- ing income, driven by a comparatively old Russian car parc, better access to car loans, increasing local production of foreign cars and expanding dealership net- works:
Growing income allows many consumers to buy their first car ever today. Es- pecially in urban areas, there is a trend to own a second car.
The Russian car parc is very old today, with 50% of cars being 10 or more years of age. With a growing focus on quality and comfort, this leads to a high de- mand for newer and better cars.
Car loans appeared widespread in 2003 on the Russian marketplace and have been developing rapidly since then. In 2006, already 45% of purchases of new cars were financed through various credit schemes.
Currently, there are numerous local car production projects in the pipeline, which will reduce prices for foreign models and increase consumer demand. How- ever, the Russian demand for new cars in 2010 can only be partly (50%) fulfilled through local production.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Outside major cities, access to new cars is still limited. However, all major brands currently expand their dealership networks and hence ease access to new cars countrywide.
Alongside with the car parc, the market for components and spare parts is growing fast as well, at a rate of 24% and 14% until 2010, respectively. The major growth will take place in the sector of components and spare parts for foreign car brands, whereas the market for Russian brands will almost stagnate over the next years. In 2008 and 2009, the primary (components) and secondary (spare parts) market for foreign brands will overtake the same markets for Russian brands, re- spectively.
The market for automotive parts is influenced especially, apart from the car parc growth, by bad road conditions (as a result, shock-absorbers are among the top-five part markets), harsh climate and a tendency among car holders to fix a car by themselves. Faked parts are a major problem, which is, however, affecting do- mestic brands more heavily than foreign brands. Fake substitutes and independ- ent aftermarket parts dominate, whereas OEM parts are mainly used for critical car elements and if available.
Currently, several international component and spare parts manufacturers are already active in Russia; many others have announced their plans to launch pro- duction in the next few years. The distribution system for spare parts to the con- sumer is still developing, alongside with the system for car service. Service cen- ters account at present for only about one-third of the spare parts sold.
The main challenge in Russia today is access to consumers. Russia is divided into 86 regions, with a population density of 8,3 on average, and in some areas as low as 0,08 inhabitants per sq. km. About 15 regions account for over 50% of GDP and over 50% of total retail consumption. The 50 biggest cities comprise about one-third of total population. Moscow is the outstanding region in Russia, repre- senting an attractive starting point. Hence, it is easy to have a quick entry into the market through major cities but difficult to be present all over Russia. Due to huge distances logistics is a hassle and costly investments into warehouse capacities
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 are needed. However, to realize the full market potential, a broad regional pres- ence is essential. Major car makers are currently about to expand their presence in Russia, but are still far away from a good coverage.
In total, the Russian market for passenger car vehicles and respective compo- nents and spare parts is highly attractive. The main challenges are setting up an effective distribution system in order to access customers countrywide, coping with falsification of parts and handling regulatory uncertainties of still developing legal and administrative systems.
To prepare this market report, we used primary and secondary research meth- ods: expert interviews and consumer surveys – in particular for the market of au- tomotive parts, which is not covered yet by any substantial statistical data – and standard analysis of secondary information available on the topic. Based on our experience and developed competencies we have built proprietary market models to forecast future market development. The report was compiled in the period from March to June 2007 and hence includes statistical data from Q1 2007, if available.
Globis is a Germany-based consulting company with broad international cover- age regarding strategy development, especially entry strategies into new markets.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 2 Country Basics
Population (mio.) 142,2 The Russian Federation is, with a terri-
Area (1.000 sq. km.) 17.075 tory of approx. 17 mio. sq. km., one of the
Territorial arrangement 86 Regions largest countries in the world. The main 7 Federal Districts expansion is from East to West, with the
Population density Russian territory stretching over 11 time 8,3 (inhabitants / sq. km.) zones. With 142,2 mio. inhabitants, Russia Life expectancy at Male: 59,6 is scarcely populated. There are 11 cities birth (years) Female: 72,9 with over 1 mio. inhabitants. Moscow (10,4 Birth rate 1,3 mio.), the Russian capital, and St. Peters-
No. of households burg (4,6 mio.) are the biggest cities by far, 50 (mio.) followed by Novosibirsk (1,4 mio.). Outside Figure 1: Russia - Country Facts, 2007 the cities the population density can be as low as 0,1 people / sq. km., for example in the Far East.
Russia is divided into 86 regions, with the cities of Moscow and St. Peters- burg enjoying independent status. These regions are grouped into 7 larger areas, called Federal Districts (see Figure 2). For detailed information about districts and regions, area and population see the Appendix (chapters 5.1 to 5.3, p. 73). As known mainly from developed countries, the Russian population is decreasing overall, at a rate of approx. 0,4% (see Figure 3).
mirkart.ru
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Figure 2: Russian Federal Districts Besides Moscow, there are positive trends in population growth in regions with- in Siberia and Far East, because of the growing importance of the oil and gas sec- tor. Life expectancy at birth especially for men is, with 59,6 years, quite low (fe- male 72,9 years). This value is supposed to grow slowly. According to the Russian Statistics Service, the average live expectancy at birth is considered to increase to 68 years (average of men and women) by 2025 from 66 in 2006.
The birth rate at present accounts for 1,3 children born to each woman at fertili- ty age or 10,4 new births per 1.000 inhabitants.
2005 F2009 Change
Russia overall 143.103,1 141.035,2 -0,36%
Central 37.451,1 36.775,4 -0,45%
North-Western 13.679,6 13.486,7 -0,35%
Southern 22.805,6 22.719,8 -0,09%
Volga 30.599,9 30.016,7 -0,48%
Urals 12.261,7 12.169,2 -0,19%
Siberian 19.735,2 19.440,3 -0,38%
Far Eastern 6.570,0 6.427,0 -0,55%
Figure 3: Population development, in 1.000, 2005-2009 Source: Russian Federal Statistics Service 2.1 Economic Development
The Russian economy has seen stable growth over the last years, driven on the one hand by high international demand and surging prices for Russia’s natural resources and raw materials like oil, gas, coal and steel, on the other hand by high domestic demand, both from business and private households. Since 1999, GDP has been growing at 6,7% on average and reached 978,7 bn. USD in 2006 (see Figure 4 and Figure 5). Forecasts on future economic development predict the economy to expand further in the next few years, though on somewhat lower growth rates.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
1800 1647,0
1600 1495,5
1400 1336,0
1170,6 1200
978,7 1000
763,7 800
590,4 600
400
200
0 2004 2005 2006 F2007 F2008 F2009 F2010
Figure 4: Development of Nominal GDP, USD bn., 2004-2010 Source: Russian Federal Statistics Service, Ministry for Economic Development
10%
9%
8% 7,3% 7,2% 7% 6,7% 6,4% 6,2% 5,9% 5,9% 6,1% 6% 5,1% 5% 4,7%
4%
3%
2%
1%
0%
1 2 3 0 0 0 0 1 0 0 0 0 2 2 2 2004 2005 2006 2 F2007 F2008 F2009 F
Figure 5: Development of GDP Growth Rates, Change in % to Previous Year, 2001-2010 Source: Russian Federal Statistics Service, Ministry for Economic Development
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Real income has been growing even faster than GDP, at a rate of 11,7%, and has almost doubled in 2006 compared to 2000 (see Figure 6). Real wages have increased more than 2,5 times for the same period. This trend is expected to continue over the next years, with real income growing at a slightly softer pace of 9,7% p.a. until 2010. However, there are strong differences among the develop- ment of regions.
8000
7000 CAGR: 6000 9,7%
5000 CAGR: 4000 11,7%
3000
2000
1000
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Figure 6: Development of Real Income / Capita, in Rouble, 2000-2010 Source: Ministry for Economic Development 2.2 Comparison with European Union
In order to better understand the Russian economy, a short comparison with the European Union is helpful (see Figure 7 for an overview). The numbers show the immense potential for the Russian economy over the next decades: with a third of the population Russia’s GDP is still far away from one third of that of the EU, not even reaching 10%. The comparison clearly points out, that infrastructure will be one of the main issues for the development of Russia, which is far less densely populated than the EU. Also, health issues especially for the male popula-
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 tion will be a driving factor for the development of Russia’s economy. The relative- ly short life expectancy is very costly for the economy.
Russia and the EU are important trade partners. The share of the European Union in Russian foreign trade accounts for about 50%, representing 43,2% of the total Russian imports and 51,5% of the exports (2005). Traditionally, machinery and transport equipment are among the main export items of the European Union – their shares are 31% and 10%, respectively, in Russian imports from the EU. Russia is a major supplier of natural resources like oil and gas, covering over 25% of the European Union’s energy needs, though the total share of Russia in the EU foreign trade is less than 10%.
European Union Russia
Population (mio.) 492,9 142,8
Area (1.000 sq. km.) 4.325 17.075
Time zone GMT 0 – +2 hours GMT+2 – +12 hours
Population density (inhabitants per sq. km.) 114 8,3
Life expectancy at birth 75,8 65,3
Number of households (mio.) 165 50
GDP (USD bn.) 14.527 978.7
GDP per capita (USD) 29.473 6.854
Exports, total (€ bn., 2005) 1.062 191
Imports, total (€ bn., 2005) 1.176 78
Figure 7: Comparison of Key Figures EU / Russia, 2006 Source: Eurostat, Russian Federal Statistics Office
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 2.3 Regional Economic Development
Russia, with its widespread territory, can not be viewed as one market. The Federal Districts and regions differ widely in their status and development. A main element to better understand these markets is to better understand access possi- bilities to potential customers. The Appendix (chapters 5.2 and 5.3, p. 74 and p.77, respectively) gives a good impression on how easy it is to access customers in respective regions: regions with no large cities and a rather low population density will be difficult to access and vice versa. Hence, Moscow, St. Petersburg and other larger cities are very good starting points to access a high share of potential cus- tomers with relatively low effort. This Russia-specific access topic has to be kept in mind when interpreting economic indicators in districts or regions. This holds also true for all groupings of regions in terms of their economic development. The Ap- pendix (see chapter 5.4, p. 82) shows such a grouping of the Ministry of Economic Development and Trade, which is helpful – but only a starting point – to under- stand the attractiveness of individual regions.
Looking at regions, 11 among all 86 regions account for over 50% of Russia’s GDP (see Figure 8).
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Moscow 20%
Khanty-Mansijsky Autonomous Region 11%
Moscow Region 4%
St-Petersburg 4%
Yamalo-Nenetsky Autonomous Region 3%
Tatarstan Republic 3%
Krasnojarsk Region 3%
Sverdlovsk Region 3%
Bashkortostan Republic 2%
Samara Region 2%
Krasnodar Region 2%
Other regions 45%
0% 10% 20% 30% 40% 50%
Figure 8: Share of Leading Regions in Total GDP, 2006 Source: Ministry for Economic Development Also, real income differs widely among districts and regions. Even within dis- tricts there are considerable differences of real income of a magnitude often more than 300%. This emphasizes, that thinking in Federal Districts can be very mis- leading in preparing entry strategies. Figure 9 gives an overview of real income in Federal Districts and selected regions.
Growth of real Income / capita Federal District Region (highest / lowest income) income 2005/06 2006 (Rouble)
Moscow 25.943,9 Central 14,6% Ivanovo Region 4.727,6
Nenetskiy Autonomous Region 15.203,4 North-Western 8,4% Pskov Region 6.690,9
Volgograd Region 9.521,7 Southern 16,8% Ingushetia Republic 2.995,8
Volga 14,3% Samara Region 11.544
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Mordovia Republic 4.602,3
Yamalo-Nenetskiy Autonomous Regi- 26.895,8 on Urals 13,4% Kurgan Region 6.537,3
Taymyrskiy Autonomous Region 10.352,9 Siberian 10,5% Ust-Ordynskiy Autonomous Region 3.474,6
Sakhalin Region 15.930,9 Far Eastern 7,5% Amur Region 6.968,7
Figure 9: Income per Capita in Regions, 2006 Source: Ministry for Economic Development
Consumer spending in terms of retail expenditure per capita is also growing at a high pace, in accordance with the growth of GDP and income (see Figure 10). The Urals district, coming from the second highest level among the districts, is ex- pected to experience the highest growth. The leading regions in terms of share of total retail trade differ slightly from those in terms of share of total GDP (see Figure 11), suggesting as one reason, that money is not always spent where it is earned. By results of 2006, almost 50% of retail trade were concentrated in nine regions: Moscow and Moscow Region, St. Petersburg, Tyumen, Sverdlovsk, Samara, Krasnodar, Rostov and Bashkortostan Republic. Among the regions, retail ex- penditure will experience the fastest growth in Astrakhan and Moscow regions, St. Petersburg, Sverdlovsk, Chelyabinsk, Kursk, Kemerovo, Novosibirsk, Sakhalin Regions, Yamalo-Nenetskiy Autonomous Region and Tuva Republic.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
CAGR CAGR CAGR CAGR CAGR CAGR CAGR 4000 9,1% 11,1% 10,4% 10,5% 13,8% 8,8% 9,5%
3000
2000
1000
0 l a rn a n n r lg ia r t e r te n th o Urals e s e u V b a C o i E S S r a F North-Western 2006 2009
Figure 10: Growth of Retail Expenditures per Capita, 2006-2009 Source: Ministry for Economic Development
Moscow 21,1%
Moscow Region 5,7%
Saint Petersburg 4,0%
Tyumen region 3,8%
Sverdlovsk Region 3,5%
Samara Region 3,1%
Krasnodar Region 3,1%
Bashkortostan 2,8% Republic
Rostov Region 2,7%
0% 10% 20% 30% 40% 50%
Figure 11: Leading Regions by Share in Total Volume of Retail Trade, 2006 Source: Ministry for Economic Development
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 3 Russian Passenger Car Market
3.1 Russian Car Parc
The passenger car parc in Russia is growing fast. The total number of pas- senger cars has increased from 10,7 mio. in 1992 to more than 27 mio. at the be- ginning of 2007. Over the last four years, the car parc grew at a rate of 4,5% an- nually. In comparison, the growth rates in Western European markets reached 1- 2% annually. This rate will even increase over the next years. We estimate a growth rate of 6,9% annually from 2003 to 2010 (see Figure 12). In 2010 there will be 35,8 mio. cars in Russian parc.
40 CAGRCAGR: 2003-2010: 6,9%6,9% 35,8 35 32,5 29,5 30 27,1 25,6 24,2 25 22,5 23,4
20 CAGR 2003-2010:CAGR: 15,4 15 21,7%21,7% 12 10,7 10 9,1 5,5 6,6 4,3 4,7 5 3,9 0,3 0 1993 2003 2004 2005 2006 F2007 F2008 F2009 F2010 Foreign cars in park Total car park
Figure 12: Development of Passenger Car Parc, Total and Foreign, in mio., 1993-2010* Source: State Auto Inspection, Globis analysis * Here and further the data on car parc is on the 1st January of the respective year. The share of foreign cars in parc is increasing faster than the total and has grown from 2,8% in 1993 to 24,5% in 2007. In 2010, 40% of the cars in Russian parc will be from foreign brands. The numbers show, that the sale of Russian brands will stagnate over the next years.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Looking at the car parc, one has to bear in mind that it is and will be quite old. Write-offs in the parc are relatively low and hence the parc is rejuvenating slowly. Nevertheless, sale of new cars makes Russia one of the top markets in the Euro- pean context.
By results of 2006, total sales reached 2,06 mio. cars, and for the first time in history sales of foreign brands exceeded those of Russian brands (see chapter 3.2, p. 32, for more details on sales). With these new sales of passenger cars, Russia is one of the world’s largest car markets. Figure 13 shows a comparison of Russia’s car sales with selected European countries. Russia will outpace Europe’s biggest market, Germany, in 2009.
Country / sales in mio. items 2005 2006 F2007 F2008 F2009 F2010
Germany 3,3 3,2 3,3 3,4 3,5 3,6
Italy 2,1 2,4 2,4 2,4 2,5 2,6
Great Britain 2,4 2,3 2,4 2,4 2,5 2,6
France 2,1 2 2,1 2,1 2,2 2,2
Russia 1,75 2,1 2,7 3,1 3,6 3,9
Figure 13: Passenger Car Sales in Russia and Selected European Countries, 2005-2010 Source: ACEA, Globis analysis 3.1.1 Structure of Car Parc by Age
A major characteristic of a car parc is its age. Not surprisingly, the Russian car parc is quite old (see Figure 14). More than 50% of Russian passenger cars are 10 years and older. Almost 25% of passenger cars are between 7 and 10 years of age. These numbers are to be expected in an economy with a relatively low income level, historically almost no opportunities for financing and a relatively small production capacity for cars. Cars are run till they can not be fixed any more.
The “Rules of Technical Inspection for Transport Vehicles”, last amendments of which went into effect on January 1st, 2006, provide for cars to be checked regu- larly: by this provision, cars with an age older than 7 years have to be checked annually. Cars with an age between 3 and 7 years have to be checked every sec-
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 ond year. Only cars passing the test get a permission to be run. The inspection comprises basic function test, for example of the brake and the steering system. Many old cars in the Russian parc would not pass this test. These cars are not used any more (or rarely, especially in the country-side) but remain registered. This mainly concerns old domestic brands like Moskwich, ZAZ, and partly VAZ vehicles. Through this effect, the age distribution as well as the size of the car parc is slightly distorted.
This provision mostly is an effective mechanism to force the owner of old cars to abandon the use of a vehicle. Registration numbers, however, remain compara- tively high. Under these conditions the parc officially rejuvenates quite slowly and it will take decades for the car parc to reach Western European level.
Over 10 years 50%
8-10 years 23%
4-7 years 11%
1-3 years 8%
Under 1 year 5%
Unknown 3%
0% 10% 20% 30% 40% 50%
Figure 14: Structure of Russian Car Parc by Age in 2006 Source: State Auto Inspection 3.1.2 Structure of Car Parc by Models
The Russian car parc is dominated by domestic brands (see Figure 15). With a share of the current car parc of almost 49%, VAZ is the clear leader. Compara- tively low prices, large dealer network, established brand name and familiar image were the key to success. However, 30% of the VAZ cars are from outdated series. The share of VAZ will reduce in the future. People more and more favourite foreign cars – mostly with better quality and technique, accompanied by the effect of a
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 narrowing price gap between domestic and foreign brands. The price gap is nar- rowing on the one hand because of more foreign producers ramping up production capacity in Russia, hence saving customs duty, cost of logistics and benefiting from low wages. VAZ, on the other hand, is consistently increasing prices. Second by number of cars in parc is GAZ, also a domestic brand. Most of these cars are different models of Volga – the traditional Russian E class car. Third in car parc is Moskwich, a domestic brand. The production of these vehicles stopped in the 90s and the company officially went bankrupt in February 2006.
VAZ 48,9%
GAZ 8,7%
Moskwich 7,9%
Toyota 5,5%
UAZ 4,3%
ZAZ 3,9%
IZH 2,4%
Volkswagen 2,0%
Nissan 2,0%
Others 13,0%
0% 10% 20% 30% 40% 50% 60%
Figure 15: Top-Ten Brands in Russian Car Parc, 2006 Source: State Auto Inspection With 5%, Toyota has the fourth largest car parc in Russia, then again fol- lowed by Russian and Ukrainian brands. Some of these brands, like ZAZ, are fairly outdated models, which show up more in official lists than on Russian roads. Volkswagen as the second foreign brand is ranked 8th in terms of car parc. How- ever, it is a head-to-head-race with Nissan that will overtake Volkswagen in 2007.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Toyota 1434
Nissan 535
Volkswagen 526
Ford 440
Mitsubishi 374
Opel 365
Audi 350
Mercedes 304
BMW 220
Daewoo 218
0 200 400 600 800 1000 1200 1400 1600
Figure 16: Car Parc of Foreign Brands in Russia, in 1.000, 2007 Source: State Auto Inspection, Globis analysis The share of Toyota is especially high in the Far East – a fact that can be ex- plained through the geographical proximity to Japan. There is a lively second-hand trade with Japanese cars in this region and cars from Toyota are favoured be- cause of their quality. But it is not only second-hand imports that contribute to the dominant position of Toyota in the Russian car parc: at least since 2000, Toyota has always been among the 4 leading companies in terms of sales of new cars. Toyota has, in comparison, a well developed dealer network in Russia. In addition, Toyota’s reputation as a very reliable, high-quality car, contributes to the success. By models, Corolla has been the most popular model in Toyota’s Russian car parc, especially among the second-hand imports.
Through the active second-hand imports from Japan, there is a large number of 1,5 mio. “right-wheeled” cars in Russia. Again, these cars are concentrated in the Far Eastern and Siberian Federal districts.
Volkswagen and Nissan are the second and third largest foreign brands in Russia. Nissan in 2007 will overtake Volkswagen, according to our estimates. Volkswagen with over 525.000 cars is the largest German brand in Russian pas- senger car parc. Most cars are registered in the Western part of Russia, in Central
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 and North-Western Federal Districts. For example, in Kaliningrad – the closest region to Europe – the share of Volkswagen in total parc accounts for 15%. For a long period, Volkswagen Passat was the most prevalent foreign model in Russian regions. The Golf is also strong in Russia. Figure 17 gives an overview over the most popular models of leading foreign brands in Russian car parc.
Brand Parc in 1.000 Popular models
Volkswagen 526 Passat, Golf
Audi 350 Audi 80 and 100, A4, A6
Mercedes 304 C-class
BMW 220 BMW3, BMW5, X5
Daewoo 218 Nexia
Figure 17: Popular Models among Foreign Brands in Russia, 2007 Source: Respective dealers, Globis analysis 3.1.3 Car Parc in Regional Markets
There are substantial differences in size and cars-to-population ratio among parcs of Federal Districts (see Figure 18). Over 30% of all vehicles are concen- trated in Central Federal District, where there are 213 cars per 1.000 people – this indicator is considerably higher than in Russia on average. Also the North-Western and Far-Eastern Districts are in the forefront by this indicator.
Inside the Federal Districts, there are outstanding regions which to a big ex- tent influence the picture of the whole region:
Moscow city and Moscow Region of Central Federal District represent to- gether 18,3% of the whole Russian parc. The share of foreign cars and new cars there is much higher than in other regions of Central Federal District. Within Southern Federal District, the regions of Dagestan and Ingushetia have, with 60 cars per 1.000 people, the lowest ratio in Russia overall, strongly influencing the ratio of the whole district. In Volga Federal District, the heart of Russian automo- tive industry where VAZ factory is located, the share of domestic cars is the big- gest in Russia. In Ulyanovsk Region of Volga District the share of foreign brands is
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 only 3,6%. The share of foreign cars is highest in the border regions Primorskiy (Far Eastern District), Sakhalin (Far Eastern District) and Kaliningrad (North- Western District), with over 80% of the whole parc.
Federal District Car parc (in 1.000) Share of Russian parc Cars/1.000 people
Central 7.966 31,1% 213
Volga 4.841 18,9% 158
Southern 3.507 13,7% 154
Siberian 3.175 12,4% 161
North-Western 2.642 10,3% 193
Urals 2.239 8,7% 183
Far Eastern 1.260 4,9% 192
Russian Federation 25.630 100% 180
Figure 18: Passenger Car Parcs of Federal Districts, 2006 Source: State Auto Inspection, Globis analysis The 15 regions with the largest car parcs are listed in Figure 19. For ratings of all regional parcs see Appendix, chapter 5.5, p. 84.
Change to Population, in Region Federal District Car parc, items 01.01.2005 Cars/1.000 people 1.000 (in %)
Moscow Central 3.096.661 7,7 10.415,8 297
Moscow Re- gion Central 1.593.606 12,9 6.628,9 240
St. Petersburg North-Western 1.063.479 9,7 4.590,3 232
Krasnodar Southern 1.047.412 3 5.098,4 205
Bashkortostan Volga 775.913 10,4 4.071,1 191
Sverdlovsk Urals 748.979 11,4 4.419 169
Rostov Southern 728.462 4,8 4.318,9 169
Samara Volga 691.630 4,8 3.195,1 216
Chelyabinsk Urals 585.070 5,5 3.541,3 165
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Change to Population, in Region Federal District Car parc, items 01.01.2005 Cars/1.000 people 1.000 (in %)
Tatarstan Volga 536.012 6,7 3.765 142
Novosibirsk Siberian 523.162 20,6 2.656,1 197
Nizhny No- vgorod Volga 511.988 3,5 3.428,2 149
Stavropol Southern 500.248 3,7 2.714,1 184
Krasnojarsk Siberian 491.315 11,1 2.859,2 172
Voronezh Central 445.297 5,5 2.323,9 192
Figure 19: Rating of Regional Car Parcs by Number of Vehicles, 2006 Source: State Auto Inspection, Russian Federal Statistics Service, Globis analysis As to the age, the “youngest” parcs have Moscow, Tatarstan Republic and Khanty-Mansijskiy Region – the share of cars older than 10 years there is less than 30%. On the opposite, the oldest parcs have Smolensk, Magadan and Kali- ningrad – the percentage of cars older than 10 years there is 70%, 90% and 80%, respectively.
3.1.3.1 Passenger Car Parc of Moscow
As by many other economic and social indicators, also by car parc character- istics Moscow is ahead of other regions. The car parc in terms of cars-to- population in Moscow is increasing fast, from 0,297 in 2006 (Russian average 0,179) to 0,317 at the beginning of 2007. On average, almost every third metropol- itan has his own car. The trend to own a second or third car per household is strongest in Moscow.
The total number of passenger vehicles has reached 3,3 mio. cars at the be- ginning of 2007. Each year the Moscow parc is increasing by over 200.000 cars (with new registrations of almost 300.000 cars) and the number of foreign cars is constantly growing: it has more than doubled from 2001 and is now over 1.5 mio. cars, almost 50% of the total car parc in Moscow. We expect the Moscow parc to
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 grow up to over 4 mio. cars in 2010, with more than 50% of these cars being for- eign brands.
The most popular foreign models are Volkswagen Passat (1,7% in parc), Daewoo Nexia (1,2%), Ford Focus (1,2%), BMW X5, Nissan Almera, Mitsubishi Lancer (each of them 0,9%), Volkswagen Golf (0,8%), Hyundai Accent (0,7%), Toyota Corolla (0,7%) and Mercedes E-class (0,6%). Though the German cars are traditionally very popular, lately the Japan brands have increased their shares in the Moscow parc, with very good sales of over 20.000 new cars p.a. of Toyota, Nissan and Mitsubishi, respectively. Nissan and Mitsubishi, for example, now have overtaken the German brands Audi and Opel (see Figure 20 for the most popular foreign brands in Moscow car parc).
Concerning age, the share of cars under 3 years old in Moscow parc is at 25% in 2006; the cars between 3 and 7 years old accounted for 16% while cars over 7 years old accounted for the remaining 59% of the parc. In comparison, the Moscow car parc is much younger than the Russian average and this trend is set to continue.
Volkswagen 115,7
Toyota 104,7
Ford 91,8
Mercedes 89,2
Nissan 80,7
Mitsubishi 80,6
Audi 71,2
BMW 67,2
Opel 66,0
Huyndai 65,1
0 10 20 30 40 50 60 70 80 90 100110120
Figure 20: Moscow Car Parc: Top 10 Foreign Brands, in 1.000, 2006
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Source: State Auto Inspection The growth of the Moscow car parc causes a serious traffic problem for the city, where the infrastructure is not sufficient to cope with the increasing traffic. However, at least in the near future, we do not expect this situation to reduce car sales. For most people public transportation is still not an alternative.
3.1.3.2 Passenger Car Parc of St. Petersburg
In the Northern capital of Russia – as St. Petersburg is often called – the cars-to-population-ratio in 2006 was at 232 per 1.000 residents. The share of for- eign cars reached 43% and today exceeds 500.000.
By models, Volkswagen Passat (2,4% of the parc), Volkswagen Golf (1,6%), Opel Vectra (1,2%), Audi-80 (1%), Opel Kadett (0,9%), BMW 5 (0,9%), BMW 3 (0,7%), Ford Focus (0,7%), Toyota Corolla (0,6%) and Mercedes of E-class (0,6%) have been the most numerous foreign cars in 2005 (see Figure 21 for the most popular foreign brands in St. Petersburg car parc).
Volkswagen Passat 23,4
Volkswagen Golf 15,6
Opel Vectra 11,8
Audi 80 9,5
Opel Kadett 8,4
BMW 5 8,3
BMW 3 7,1
Ford Focus 6,7
Toyota Corolla 6
Mercedes E-class 5,9
0 5 10 15 20 25 30
Figure 21: St. Petersburg Car Parc: Top 10 Foreign Models, in 1.000, 2005 Source: State Auto Inspection
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 3.1.3.3 Passenger Car Parc of Krasnodar Region
Krasnodar Region with 1,05 mio. cars at the beginning of 2006 has the fourth largest parc after Moscow city, Moscow region and St. Petersburg. Over 50% of the parc are VAZ models. 18% of the total parc are foreign brands, led by Toyotas: Toyota (2,5%), Volkswagen (1,8%), Opel (1,8%), Ford (1,4%), Mercedes (1,4%), Nissan (1,2%), Audi (1,1%), BMW (1,0%), Mitsubishi (0,7%) and Honda (0,5%) (see Figure 22 for the most popular foreign brands in Krasnodar car parc).
Toyota 26,6
Vokswagen 18,8
Opel 18,5
Ford 15,1
Mercedes 14,2
Nissan 12,6
Audi 11,4
BMW 10,3
Mitsubishi 7,9
Honda 4,9
0 5 10 15 20 25 30
Figure 22: Krasnodar Region Car Parc: Top 10 Foreign Models, in 1.000, 2006 Source: State Auto Inspection Only 11% of the foreign cars are less than 3 years old. About 80% of foreign cars are over 7 years old. Most popular models are Volkswagen Passat, Volkswagen Golf, Audi 80, Toyota Corolla, BMW 5, BMW 3, Opel Kadett, Opel Vectra, Audi 100, and Hyundai Accent.
3.1.3.4 Passenger Car Parc of Kaliningrad Region
With 250 cars per 1.000 people in 2005, Kaliningrad is well supplied with cars. Major characteristics of its parc are one of the highest shares of foreign cars across the country and high age of cars.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Due to the geographical location of Kaliningrad the share of foreign cars is over 80%. The top-10 models are Audi 100 (6,5%), Volkswagen Passat (6,2%), Volkswagen Golf (5,2%), Audi 80 (3,6%), Opel Ascona (3,2%), Opel Kadett (2,9%), Mercedes 200-series (2,2%), Mercedes 300-500 series (2,1%), Ford Sier- ra (2%) and BMW 5 (2%) (see Figure 23 for the most popular foreign brands in Kaliningrad car parc).
The series indicate the age-structure of the car parc: over 95% of cars are older than 7 years, making this parc one of the oldest in the country.
Volkswagen 35,2
Opel 25,7
Audi 23,5
Mercedes 18
Ford 16,4
BMW 8,7
Mazda 5,6
Nissan 4,6
Mitsubishi 4,3
Renault 4,2
0 5 10 15 20 25 30 35 40
Figure 23: Kaliningrad Car Parc: Top 10 Foreign Brands, in 1.000, 2005 Source: State Auto Inspection
3.1.3.5 Passenger Car Parc of Primorskiy Region
Primorskiy Region also has a high share of foreign cars (84%) due to its loca- tion at the very South-East. Most of these cars are second-hand imports from Ja- pan. Toyota represents 46% of the parc; second in parc is Nissan with 13%. Al- most 80% of all foreign cars are right-wheeled. Mercedes as the first European brand ranks 15 with only a few hundred cars in this region (see Figure 24 for the most popular foreign brands in Primorskiy car parc).
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Toyota 189,8
Nissan 54,7
Mitsubishi 25,2
Mazda 16
Honda 10,5
Subaru 5,6
Isuzu 6,2
Suzuki 5
Daihatsu 2,3
Ford 1,3
0 20 40 60 80 100 120 140 160 180 200
Figure 24: Primorskiy Region Car Parc: Top 10 Foreign Brands, in 1.000, 2006 Source: State Auto Inspection The geographical location will also be the driving factor for the future. A rise in Chinese cars can be expected, with the Chinese automotive industry developing rapidly.
3.1.3.6 Passenger Car Parc of Novosibirsk Region
Together with a rapid growth of production and disposable incomes – based on a solid industrial development – the passenger car parc in this region is enjoy- ing a rapid development. From 2005 to 2006 it has grown by over 20% and the number of cars per 1.000 people has increased from 158 to 197.
The fleet is dominated by Russian cars, with Toyota being the largest foreign brand in the fleet: Toyota (12%), Nissan (2,4%), Honda (1,3%), Mitsubishi (1,1%), Mazda (0,6%), Mercedes (0,5%), Ford (0,5%), Suzuki (0,4%), Audi (0,4%), BMW (0,4%), Opel (0,3%) and VW (0,3%) (see Figure 25 for the most popular foreign brands in Novosibirsk car parc).
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Toyota 51,9
Nissan 10,4
Honda 5,8
Mitsubishi 4,8
Mazda 2,7
Mercedes 2,4
Ford 2,3
Suzuki 1,8
Audi 1,6
BMW 1,5
0 10 20 30 40 50 60
Figure 25: Novosibirsk Car Parc: Top 10 Foreign Brands, in 1.000, 2005 Source: State Auto Inspection
3.1.3.7 Passenger Car Parc of Rostov Region
Rostov region has one of the largest car parcs in the country (over 700.000 cars). However, in terms of cars-to-population-ratio, it is behind country average with 169 cars per 1.000 residents. The share of foreign cars in the parc of Rostov Region is relatively small (about 18%; see Figure 26 for the most popular foreign brands in Rostov car parc). Also, in terms of age of cars, Rostov is behind country average with 76% of the car parc being older than 7 years.
The improvement of the economic situation in the next years will have an in- fluence on the car parc: The Southern part of Russia is getting more in the focus of the automotive industry, which today is in the process of establishing new dealer- ship centers in these regions. This will further increase the cars-to-population-ratio as well as the share of foreign brands.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Opel 11,3
VW 11,1
Audi 9,6
Ford 9,3
Toyota 8,2
Mercedes 7,5
BMW 6
Nissan 4,4
Daewoo 4,2
Hyundai 3,9
0 5 10 15
Figure 26: Rostov Car Parc: Top 10 Foreign Brands, in 1.000, 2005 Source: State Auto Inspection 3.2 Passenger Car Sales and Imports
3.2.1 Size of Market
Car sales and imports in Russia follow a certain trend (see Figure 27): at the end of the last century, the vast majority of new cars in the parc came from do- mestic car-makers, with imports of used foreign brands being second as a supply source. With an increase in income and new production capacity of foreign car makers in Russia, second-hand imports of foreign cars are beginning to be re- placed through either imports of new cars or domestic sales of foreign cars. A few years later, Russian domestic car makers lose their share in new sales to new cars of foreign brands. This trend is set to continue, if Russian manufacturers do not find a defense strategy. Today, we expect the total number of car sales from domestic brands to be almost stable over the next years.
The sale of new cars grows at a rate of 21% from 2006 to 2010. Foreign car sales grow substantially faster at a rate of almost 34%. In 2010, sale of locally produced foreign brands will be at 1,1 mio. units, which is about total capacity. By then the production capacity of foreign car makers in Russia will be able to serve
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 about 30% of the Russian market, against about 20% of domestic car makers (see Figure 28). The biggest supply source, however, will be imported new cars. Total local production capacity will only be sufficient to supply 50% of the market.
F2010 18% 53% 28% 1%
F2009 20% 52% 25% 2%
F2008 24% 50% 21% 5%
F2007 29% 45% 17% 8%
2006 39% 35% 14% 13%
2005 48% 27% 8% 17%
2004 55% 17% 8% 20%
2003 59% 11% 3% 27%
2002 59% 8%1% 32%
0% 20% 40% 60% 80% 100% Russian Imported New Locally Produced Foreign Cars Imported Second-hand
Figure 27: Relative Sales and Import Structure of Car Market, 2002-2010 Source: AEB, ASM-Holding, State Statistics Office, Globis analysis
New foreign Foreign "second- Year Total sales Russian hand" imports Imported new Locally produced
2002 1.420.000 450.000 120.000 10.000 840.000
2003 1.490.000 400.000 160.000 50.000 880.000
2004 1.610.000 320.000 280.000 130.000 880.000
2005 1.750.000 300.000 470.000 140.000 840.000
2006 2.060.000 260.000 720.000 280.000 800.000
F2007 2.650.000 220.000 1.200.000 450.000 780.000
F2008 3.110.000 150.000 1.560.000 650.000 750.000
F2009 3.560.000 80.000 1.860.000 900.000 720.000
F2010 3.940.000 40.000 2.100.000 1.100.000 700.000
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Figure 28: Sales and Import Structure of Car Market, 2002-2010 Source: AEB, ASM-Holding, Russian Statistics Office, Globis analysis There are many reasons for Russian brands to loose their position. Most Russian producers face increasing production costs and are not well equipped to create attractive models with good quality as fast as the consumer demand devel- ops. In addition, spare parts for foreign cars become increasingly available, alt- hough there are still shortages today. Hence, the Russian brands serve the low end market of price-sensitive customers. This market, however, is growing much slower than the higher-class segments since financing is becoming widely availa- ble and the income of consumers increases. Today, the market for cars with prices below 10.000 USD accounts for 46% of all sales, the market for cars with prices between 10.000 and 15.000 USD for around 20%. The relations between both markets are expected to change in favour of the latter one. The development of the average car price, which, according to RBC, rose from 13.100 to 15.600 USD in 2006, gives an indication for this development.
In addition, Renault has already introduced its low-end model Logan and Volkswagen is also planning a production of a new model targeting the low-end market at a price below 10.000 USD by 2008. Chinese manufacturers, who are getting started to expand into foreign markets like Russia, also target this seg- ment.
As demonstrated in Figure 29, 2006 was the critical year, with sales in foreign brands exceeding sales in Russian brands (new car sales) in total numbers.
The share of second-hand car imports in sales will decrease naturally with higher local income, the availability of financing and the growing local foreign vehi- cle production. This is not to say, that there will not be a lively second-hand car market in Russia. We expect this market to increase rapidly, but on the basis of new foreign and domestic cars bought in Russia, not through imports of second- hand cars.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
3500 3200 3000 2760 2500 2210 2000
1650 1500
1000 840 880 880 840 1000 800 780 750 720 700 500 610 410 130 210 0 2002 2003 2004 2005 2006 F2007 F2008 F2009 F2010
Russian Foreign
Figure 29: New Car Sales: Foreign and Domestic Brands, 2002-2010 Source: AEB, ASM-Holding, State Statistics Office, Globis analysis Considering the geographical aspect of sales, Moscow and St. Petersburg together represent over one third of the whole Russian passenger car market. It is important to mention, that a part of Moscow sales represent wholesale supplies to other regions. Other big markets by results of sales in 2006 (source: Autostat) are:
Samara Region (5% of sales) Sverdlovsk Region (4,2%) Tyumen Region, including Khanty-Mansijsky Region (3,4%) Krasnodar Region (2,9%) Tatarstan Republic (3,3%) Rostov Region (2,8%) Bashkortostan (2,7%) Perm Region (2,4%) Chelyabinsk (2,5%) Nizhny Novgorod (2%).
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Sales of foreign brands have increased by 65% during 2006 and already by 74% in the 1st quarter of 2007, compared to the same period of the previous year, according to AEB (see Figure 30; for a complete list, see Appendix, chapter 5.8, p. 92). Ford, in 2006, was the leader among foreign brands, thanks to its popular models Focus and Fusion, closely followed by Chevrolet. Toyota, in 2006 on rank 4, has overcome Hyundai, rank 3 in 2006, in the 1st quarter of 2007, as Hyundai’s models Accent and Getz are loosing their popularity. Renault experienced a strong increase through its new model Logan, targeted on the low-end market, and ranked 6 in 2006. Audi, VW and Mercedes are growing on market average.
Boosting sales of brands mostly stem from local production facilities, which are newly opened and allow to tackle the market with lower prices: Considering the top leading models in 2005 and 2006, a lot of them were produced at Russian or other former USSR plants – Ford Focus, Renault Logan, Chevrolet Niva and Hyundai Accent (Russian Federation), Daewoo Nexia (Uzbekistan) or Chevrolet Lanos (Ukraine).
Noteworthy is the appearance of Chinese brands, although they still account for a small number in sales. Chery experienced the strongest growth in 2006 (about 1.100%), but coming from a very small sales volume in 2005 this number should not be overestimated.
Brands 2006 2005 Growth 06/05 1st q 2007 1st q 2006 Growth 07/06
1 Ford 115.985 60.564 92% 39.071 15.950 145%
Chevrolet (incl. 2 111.458 66.532 68% 36.735 17.564 109% GM-AvtoVAZ)
3 Hyundai 100.685 87.457 15% 22.401 21.930 2%
4 Toyota 95.689 60.638 58% 29.368 15.033 95%
5 Nissan 75.529 46.485 62% 18.441 10.235 80%
6 Renault 72.484 29.177 148% 17.897 10.682 68%
7 Mitsubishi 68.845 55.148 25% 14.748 13.936 6%
8 Daewoo 66.717 48.623 37% 17.033 15.273 12%
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Brands 2006 2005 Growth 06/05 1st q 2007 1st q 2006 Growth 07/06
9 Kia 59.993 24.671 143% 13.844 10.679 30%
10 Mazda 32.290 21.120 53% 9.378 6.196 51%
11 Opel 19.983 9.398 113% 9.380 2.737 243%
12 Volkswagen 19.186 12.007 60% 5.084 3.245 57%
13 Suzuki 16.118 9.803 64% 5.626 2.716 107%
14 Honda 15.723 8.906 77% 4.524 1.543 193%
15 Peugeot 15.287 9.251 65% 4.217 2.644 59%
... … ... … … … … …
TOTAL 1.008.765 611.840 65% 295.469 170.258 74%
Figure 30: Sales of Foreign Car Brands, 2005, 2006, Q1 2007 Source: AEB, Globis analysis The sale in brands is, of course, driven by the sale in models (see Figure 31): Ford Focus is the leader in sales by models in 2006. Renault Logan is second in 2006, with an increase of about 600%. It is noteworthy, that 7 out of the top-ten models are manufactured in Russia or the former USSR.
Model Country of production Sales 2006 Sales 2005 Growth, %
1 Ford Focus Russia 73.468 39.774 85%
2 Renault Logan Russia 49.323 7.057 599%
3 Mitsubishi Lancer Japan 46.969 39.195 20%
4 Daewoo Nexia Uzbekistan 43.415 35.175 23%
5 Chevrolet Niva Russia 41.155 44.059 -7%
6 Hyundai Accent Russia 38.808 32.741 19%
7 Chevrolet Lanos Ukraine 37.215 2.325 1501%
8 Nissan Almera England, Korea 32.241 21.822 48%
9 Toyota Corolla Turkey, England 31.222 22.442 39%
10 Kia Spectra Russia 25.139 1.534 1539%
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Model Country of production Sales 2006 Sales 2005 Growth, %
11 Daewoo Matiz Uzbekistan 23.302 13.448 73%
12 Toyota Camry Japan 18.099 12.860 41%
13 Mazda3 Japan 18.078 11.487 57%
14 Ford Fusion Germany 16.532 6.815 143%
15 Chevrolet Lacetti Korea 16.191 6.975 132%
16 Hyundai Getz Korea 13.183 15.178 -13%
17 Toyota Avensis England 13.140 8.612 53%
18 Mazda6 Japan 12.819 8.455 52%
19 Hyundai Tucson Korea 12.606 5.720 120%
20 Renault Megane Turkey, Spain 12.391 8.751 42%
21 Toyota RAV4 Japan 12.030 6.335 90%
22 Nissan Primera England 11.142 9.130 22%
23 Ford Mondeo Belgium 10.120 6.173 64%
24 Hyundai Sonata Russia 9.987 10.890 -8%
25 Nissan X-Trail Japan 9.933 7.420 34%
Figure 31: Sales of Foreign Car Models, 2005-2006 Source: AEB, Autostat, Globis analysis
In 2006, the overall SUV-trend could be observed in Russia as well. While the status and convenience aspect is true for Russia as well, there are much more practical reasons for SUVs in Russia: the road conditions in winter and in the countryside any time of the year in Russia are manageable at best with cars with good cross-country characteristics.
In the 1st quarter of 2007, Ford has strengthened its position due to the sales of Fusion (sales of this model increased by as much as 420%), and Chevrolet Niva showed again positive sales dynamics. Renault Logan and Mitsubishi Lancer, on the contrary, have slowed their growth, and Hyundai Accent sales remained on the same level as in the 1st quarter of 2006. The leaders by growth in sales became
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Chery Amulet, Opel Astra and Chevrolet models Aveo and Lacetti. The sales of SUVs Suzuki Grand Vitara and Toyota RAV4 also show high growth rates of 186% and 116%, respectively (for details, see Appendix, chapter 5.8, p. 92).
3.2.2 Sales Drivers
As already mentioned, the automotive market in Russia is booming, and the sale of new foreign cars is growing especially fast. There are several drivers for this rapid market development:
Increasing income Development of credit system and car loans Increasing local production of foreign brands Expansion of dealership networks Psychological reasons influencing consumer behaviour.
Normally, an increase of 1% of GDP means at least 0,5-0,7% growth in the automotive market. This correlation holds also true in the case of Russia. In Rus- sia, all economic indicators show a healthy growth of the economy and wide- spread parts of the population (see chapter 2, p. 9). In addition, rising real estate prices further increase optimism and provide for financial leverage.
3.2.2.1 Car Loans
The system of car loans is one of the major aspects influencing the automo- tive market in Russia. The rise in the car credit market took its start in 2003. Since then, traditional banks and other players have started to offer car loans on a broader basis. Falling interest rates (and falling inflation rates) increase the attrac- tiveness of the offers. Growing competition on the credit market also leads to sim- plified standard applications, and normally an employed person with a stable in- come faces no problems in getting a credit.
Whereas in 2003 the number of cars sold on credit was 170.000 or 11% of the market, it was already 500.000 cars (30% of the market) in 2005 and 750.000 or 36% of the market in 2006, according to Autostat (see Figure 32). We expect
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 the share of cars bought on credit to increase further, with a mid-term share as high as 75%.
3.000 2.650 2.500 2.060 2.000 1.750 1.610 1.490 1.500
1.030 1.000 750 500 500 350 170
0 2003 2004 2005 2006 F2007 On Credit Total Sales
Figure 32: Cars Bought on Credit, in 1.000, 2003–2007 Sources: Autostat, Globis analysis The most cars bought on credit are foreign brands priced at 10.000 to 25.000 USD, whereas the share of loans for Russian cars is decreasing. We estimate that 45% of new foreign cars were sold on credit in 2006.
The conditions for car credits are going to improve in the future, since the big car makers like Toyota, Renault, DaimlerChrysler, BMW and others have an- nounced their plans to establish their own credit institutions in Russia. This would mean lower interest rates and attractive conditions for potential car buyers and will be a substantial driver for the development of foreign brands in Russia. Russian brands today have no own banks to hand out car loans – but this is only a matter of time.
3.2.2.2 Local Production Projects of Foreign Car Makers
There are clear benefits gained by setting up local production capacity on Russian territory: the import duty regime with its 25% duty on new cars and the hassle of importing into Russia – cars and spare parts – make business costly and
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 unreliable. However, under normal rules, there is still import duty levied on com- ponents that are imported to an assembly line. A comparatively well educated workforce and still relatively low wages are additional factors for engaging actively on Russian territory.
In order to support the automotive industry, Russia introduced the “Assembly Industrial Mode” in the governmental resolution No. 166 from 29.03.2005. Accord- ing to this document, the import duties for certain groups of auto components – supplies to assembly lines – are abolished or reduced to 0-5% from 10-20%. To benefit from this preferential treatment, assembly projects must apply and fulfill the following criteria:
A minimal annual capacity of 25.000 vehicles Minimum a two-shift operation Maximum 30 month from start to operation for Greenfield projects, 18 month for Brownfield projects Local assembly process must comprise body welding, painting, assembly Certain milestones on the degree of localization (value added produced in Russia): 10% within the first 24 months of operation, 20% within the follow- ing 18 months, and 30% within the following 12 months.
This framework was extended in June 2006 (decision No. 566) to OEM pro- ducers of car components, who now can also benefit from these preferential du- ties. With this decision, the assortment of articles subject for reduced tax was wid- ened from 67 to 130 items. The idea behind these governmental regulations is to improve conditions in the automotive sector, where the weak supply of compo- nents and its low quality are among the main problems, and to realize a shift from import of cars from abroad to local production.
One of the first foreign car makers to assemble and manufacture in Russia was General Motors with its joint venture with Russian VAZ in 2002. The models manufactured are still very successful, with the popular SUV Chevrolet Niva on top. In 2002, Ford also started production of its vehicles in Vsevolzhsk (region of St. Petersburg). At present, Ford is the leader of foreign car sales in Russia, with
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 own production capacities in Russia. Other car makers start production in Russia through contract manufacturing agreement. ZAO Avtotor from Kaliningrad is one of the contractors which assemble different foreign brands. ZAO Avtotor started in 1999 with the assembly of KIA Sportage, but soon extended its program to BMW, Cadillac and lately also to Chinese brands Great Wall, Chery and Yuejin (the last is represented by several truck models). Figure 33 gives an overview over foreign production in Russia. In 2006, other big players like Toyota, Nissan, Volkswagen, Peugeot and Citroen announced their own production projects in Russia.
No. of No. of Enterprise cars, 2006 cars, 2005
"Avototor", independent contract manufacturer, Kaliningrad (KIA, BMW, 1 40 16 GM, Great Wall, Chery)
2 “GM-AvtoVAZ”, Joint Venture, Tolyatti (Chevrolet) 48 52
3 “TagAZ”, Joint Venture, Rostov Region (Hyundai) 56 45
“Avtoframos”, was organized as Joint Venture, now with a 94% stake of 4 51 10 Renault, Moscow (Renault)
5 “Ford Motor Company”, subsidiary, St. Petersburg (Ford) 62 33
“IZH-Avto”, independent contract manufacturer, belongs to SOK group, 6 24 4 Izhevsk (KIA)
Total 281 160
Figure 33: Production of Foreign Car Brands in Russia, in 1.000, 2005-2006 Source: ASM-holding, NAPI By the end of 2006, ten automobile producers have applied for the industrial assembly agreement: Volkswagen, General Motors, Nissan, Toyota, Ford, Kia, SsangYong, Renault, ZAO “GM-Autovaz” and VAZ. Fiat, Chery and Isuzu have submitted applications and are waiting for the decision. At the beginning of 2007, besides these producers also TagAZ (Hyundai) and Great Wall applied for condi- tions of the regime.
In total, the production capacity of foreign investors is going to grow further to about 1,1 mio. vehicles by 2010 (see Figure 34 for details).
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Brand Production plan by 2010 Starting year
Chrysler (GAZ, Nizhny Novgorod) 65.000 2008
Ford (St. Petersburg) 75.000 2003
Nissan (St. Petersburg) 55.000 2008
Renault (Moscow) 120.000 2005
Volkswagen (Kaluga) 115.000 2007
GM (Kaliningrad, Tolyatti, St. Petersburg) 140.000 2002, 2007, 2008
Toyota (St. Petersburg) 50.000 2007
Hyundai (Rostov Region) 100.000 2000
KIA (Kaliningrad, Izhevsk) 70.000 1999, 2005
Great Wall (Elabuga) 50.000 2008
Chery (Kaliningrad) 100.000 2008
Peugeot, Citroen 50.000 2009
Geely (Novouralsk) 30.000 2007
SsangYoung (Naberezhnye Chelny) 10.000 2005
Fiat (Naberezhnye Chelny) 40.000 2006
Zhongxing (Novouralsk) 30.000 2007
Volvo (Kaluga Region) 10.000 2009
Renault Truck (Kaluga Region) 5.000 2009
FAW (Sverdlovsk Region) 5.000-8.000 2008
Suzuki (St. Petersburg) 10.000 2009
Total 1.125.000
Figure 34: Planned Local Production for Foreign Cars in Russia up to 2010 Source: Za Ruljem, Globis analysis Concerning the component producers, about 40 companies have shown their interest to manufacture under the conditions of the industrial assembly regime. Among them are Magna International (Canada), Bosch AG (Germany), Zahnrad
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Fabrik Friedrichshafen AG (Germany), Linner (Germany), Virol (Germany), Sie- mens AG (Germany) and others.
3.2.2.3 Dealership Networks / Distribution Systems
As in many fast growing markets, the Russian dealership structure today is not standardized completely:
1. Most foreign brands in Russia are represented by their official dealers, who have been trying lately to expand their businesses into the regions in different parts of the country. 2. There still exist “unofficial” dealers for some brands. The import and resale of new cars is not prohibited. However, they are not able to provide the official ser- vice and therefore an official guarantee on the cars sold. The grey market made up 30% of new car sales in 2004. Today we estimate this grey market to be less than 10%. 3. “Open-air” markets are still the major second-hand marketplace for used cars. 4. An increasing number of companies specialize in second-hand car trade.
In the course of the last years the structure of the distribution system has been changing in consistence with the market development.
At the beginning of 2007, the following brands had the largest dealer net- works (see Figure 35): KIA is selling via three big distributors in Russia – Sokia, Kia-Sandol and Avtotor – each of them working independently. With these ar- rangements, KIA increased its presence in Russia heavily, now having the most outlets (225) of all foreign brands. Chevrolet-Niva (GM-VAZ-joint-venture) com- mands the second largest dealership network. Ford, the current leader in sales, has the third largest network in Russia. A particular attention deserves Ssang- Yong: without any official dealers in 2004, it now has 64 dealer centers. Mitsubishi and Renault are other brands with very extensive networks across the country. Toyota in 2006 has been active in expanding its network to the East. To compare, VAZ currently has about 330 dealer centers, and GAZ approximately 120.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 There are two trends for official distribution systems at present: active expan- sion to regions outside Moscow and St. Petersburg and rapid increase in numbers of centers. During the last 2 years, the number of centers has been growing by 25- 30% on average.
No. of centers No. of centers Brand 1st Quarter of 2005 1st Quarter of 2007 KIA 57 225
Chevrolet-Niva 59 124
Ford 87 115
Mitsubishi 41 85
Chevrolet 16 82
Renault 60 72
Opel 32 71
Hyundai 40 65
SsangYong 0 64
Volkswagen 39 49
Skoda 38 47
Mercedes-Benz 37 43
BMW, Mini 28 40
Nissan 30 36
Audi 22 34
Toyota 17 33
Citroen 19 28
Peugeot 14 28
Subaru 14 28
Honda 14 25
Figure 35: Largest Dealership Networks of Foreign Brands in Russia, 2005-2007 Source: Globis
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 There are over 200 official dealers in Moscow and a lot of them have several trading centers. In St. Petersburg the number of dealers exceeds 100. Since the competition is quite fierce, the tendency in the last two years has been to move to other regions. Big cities like Chelyabinsk, Kazan, Krasnodar, Krasnoyarsk, Novo- sibirsk, Perm, Rostov and Voronezh have normally all foreign brands officially rep- resented there; in Yekaterinburg and Nizhny Novgorod most brands have opened their second center. In the third quarter of 2006 alone 25 new centers were opened in different regions (see Figure 36).
Brand City Status
Mitsubishi Orel Dealer Center
Kostroma Dealer Center
Penza Dealer Center
Tyumen Dealer Center
Bryansk Dealer Center
GAZ (Volga, Gazelle, St. Petersburg Dealer Center Sobol etc.) Nizhny Novgorod Showroom
Volgograd Dealer Center
Nizhnevartovsk Dealer Center
Toyota Novokuznetsk Dealer Center
Ekaterinburg Dealer Center
Krasnoyarsk Dealer Center
Volvo St. Petersburg Showroom
Tolyatti Dealer Center
Volkswagen Izhevsk Dealer Center
Perm Dealer Center
Peugeot Moscow Dealer Center
Rostov-on-Don Dealer Center
Ford Nizhny Novgorod Dealer Center
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Brand City Status
Mazda St. Petersburg Showroom
Mercedes Novosibirsk Dealer Center
Subaru Perm Dealer Center
Lexus Yekaterinburg Showroom
Land Rover Tolyatti Showroom
Jaguar Tolyatti Showroom
Figure 36: Dealer Centers Opened in the Third Quarter of 2006 Source: Autobusiness Magazine The official dealer centers are built according to the “3S” distribution system: each brand is sold in a separate house, with official service and original spare parts offered there. The big brands, among which are Mercedes, BMW, Audi, Peugeot, Toyota and Great Wall have opened their own centralized ware houses of original spare parts, which allow reduction of delivery time. The presence of an own warehouse is becoming a must, especially considering the dealer network expansion – each of the dealer units needs an adequate spare part provision.
Most brands sell through independent distributors / dealers. Most of these companies represent several brands at the same time (see Figure 37) and are also engaged in second-hand car trades.
Company Official Distributor of Brands
Rolf Mitsubishi, Hyundai, Audi, Ford, Mazda, Mercedes-Benz, Peugeot
Skoda, Renault, Nissan, Daewoo, Kia, Chery, Suzuki, Hyundai, Citroen, Fiat, Faw, Avtomir Mitsubishi, Opel, Chevrolet, Ssang Young
Major Auto Chrysler, Jeep, Dodge, Renault, Nissan, Volvo, Mazda, Land Rover, Ford, Honda
Nezavisimost Audi, Volkswagen, Mazda, Ford, Volvo, Land Rover, Jaguar
Eleks Polus VAZ, Kia, Hyundai
Volkswagen, Audi, Mazda, Opel, Saab, Chevrolet, Hummer, Ford, Skoda, VAZ, Atlant M GAZ, UAZ, MAZ
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Company Official Distributor of Brands
Avtostart VAZ, Audi, Mercedes, BMW, Audi, Ford
Business Car Toyota, Lexus
Daewoo, KIA, Hyundai, Renault, Ford, Chery, SsangYong, Fiat, Sens, Yuejin, VAZ, Incom - Avto GAZ, UAZ
KM/h Opel, Chevrolet, Fiat, Kia, Daewoo, Hummer, Cadillac, SsangYong
Genser Nissan, Opel, Chevrolet, SAAB, Cadillac, Ford, Hummer, Infiniti
Avto Key Daewoo, Hyundai, Kia, Renault, Suzuki, VAZ
Avtodom BMW, Mini
Avtocenter City Opel, Cadillac, Chevrolet, Hummer
Trinity Motors Volkswagen, Opel, Chevrolet, Cadillac
Figure 37: Major Russian Automobile Dealer Companies Source: Globis In Moscow, St. Petersburg and some other big cities like Yekaterinburg and Nizhny Novgorod there is already a competition between dealers of the same brand and the remaining “grey” dealers have a hard standing. In other regions with a loose distribution network, there are many more grey dealers. The expansion of official dealers to other regions forces the grey dealers out of the market since consumers then have the choice to get official service and official guarantee. The role of grey dealers is and will be, however, important in the segment of “rare” cars, even though such companies as Porsche or Cadillac have opened dealer centers lately. The second-hand car marketplaces are the “open-air” markets, saloons of companies specializing on second-hand cars, and lately also the trade centers of official dealers. The dealers in “open-air” markets are usually individuals and small compa- nies, who import used foreign cars to Russia on their own. On the marketplace, registration services and help with legal procedures are provided, so that a deal can be made comfortably in quite a short time. The big variety allows the consum-
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 er to compare. At the same time, however, there is no guarantee on car quality and a comparatively high risk to be cheated. Whereas open-air markets traditionally were a common place to buy second- hand cars, today the image of these markets is slowly changing: in Moscow they are already associated with the low-end segment. In other regions they still give customers an opportunity to buy a reliable foreign car at a good price. There also exist companies with saloons specializing in trade of used cars (see Figure 38). In some cases they are specializing in vehicles from particular countries – for example, Japanese cars or cars from Europe or the US. Normally, these companies have a partner (i.e. a second-hand-trader) abroad and therefore can offer a customer a broad choice of interesting cars. A client can also “order” a special model, which a company is promising to deliver in a time of normally 2 to 4 weeks. The advantages of such saloons, compared to the open-air-markets, are guarantees provided by the trader. Some of these companies trade also new cars along with the used ones – that is, clients have a choice of 5 to 10 new cars in a saloon, or can order a new car to be delivered from abroad.
Company Specialization
Berlin Auto Cars from Germany
Avto Karavan Second-hand cars from Europe and USA
Dali Motors Cars from Europe and USA
Avtostart Second-hand trade: foreign and Russian cars
Autosalonbu Second-hand cars from Europe, USA, Japan
Usedcars Sell-buy and order second-hand cars from Germany, USA, Canada
Canmore Order second-hand from Germany and USA
SV-Motors Second-hand and new cars from Europe and America
Autoconsultant BMW, Mercedes-Benz, Porsche, Lexus, Audi, VW, Opel, Toyota
Borex Second-hand cars from Germany: BMW, Mercedes-Benz, Audi, VW, Opel
Figure 38: Selected Second-Hand Car Dealers in Russia Source: Globis
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Comparatively new players in the second-hand car market are the saloons of official dealers, which establish the system of trade-in and organize pavilions with used cars in their trade centers. A customer can rely on the official brand repre- sentative and be sure about the history of a particular car. However, there is a considerable price difference of a few thousand Euros more in comparison to the open-air-markets. Nevertheless, we suppose that a bigger share of the used car trade will move to official saloons in future. At present, an official dealer realizes about 100 used cars per months on average, compared, for example, to 90 cars per day in the big trade complex “Autogarant” of Mytishinsky open-air market in Moscow.
3.2.2.4 Consumer Preferences
For many Russian consumers the most important purchase criteria when buying a car is its cost-effectiveness. This attitude, of course, differs depending on the income group, which to a large extend correlates with the region: in Moscow and St. Petersburg brand and design are more important than in other regions.
On Russian average, cost-effectiveness (with comprises quality to a large ex- tent) is followed by brand and design. Figure 39 gives an overview over key pur- chase criteria.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Economical car 27,8%
Brand 23,4%
Design 23,0%
Safety 15,6%
Size 4,3%
0% 5% 10% 15% 20% 25% 30%
Figure 39: Key Criteria Influencing Car Choice in Russia, Single-Choice Source: kolesa.ru Given these criteria, Russian consumers in total prefer foreign cars (see Fig- ure 40). Even in the lowest income group 27,9% of respondents say that they would prefer to buy a new foreign vehicle; in the segment of consumers with high- est income it is 84,4%.
A typical Russian holder of a new foreign car is a 37 year old man or woman (in Europe: 47 years old, according to AEB) with higher education (office worker or manager) with a monthly income of about 580 Euros. A typical person, who is planning a purchase of a new foreign vehicle, is 35 years old and has a monthly income of 530 Euros. Buyers of foreign cars are middle-class representatives and young city inhabitants, who are conscious about high quality standards. They are replacing their car every 4 to 5 years. In the big cities, more and more women drive cars (in Moscow and St. Petersburg 25-30%). This goes hand in hand with many households having a second and third car in theses cities. In general, how- ever, the purchase decision to buy the (one) family car is still made by men.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
New foreign car New Russian car
100% 84% 80% 64% 60% 48% 38% 40% 40% 28% 25% 23% 21% 16% 20% 13% 1% 0% 250-350 350-500 500-650 650-1000 over average 1000 monthly income, Euro
Figure 40: Car Buyer’s Preferences Depending on Income Size Source: Russian National Insurance Company Analysing Russian consumers today, one has to bear in mind that every year about 12% of Russians buy their first vehicle ever, whereas in Europe only 1% are first buyers, according to AEB.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 4 Russian Components and Spare Parts Market
4.1 Market Size for Components and Spare Parts
The market needs to be divided into primary market (supplies to assembly lines) and secondary market (aftermarket) for spare parts. Given the status of the Russian car parc and its dynamic, both markets are growing substantially.
4.1.1 Primary Market
The primary market, that is the delivery of components to the assembly line, depends on the volume of new cars assembled and produced in Russia, the pric- ing of components and the value-added of the manufacturer.
Sales numbers were already discussed earlier, along with the development of local production projects of foreign brands in Russia (see Figure 28, p. 34). The technical progress will lead to increased pricing of components, both for foreign and Russian cars. Given these developments, the primary market will grow sub- stantially from about 5,0 bn. USD in 2006 to 11,8 bn. USD in 2010 (see Figure 41).
The main drivers for this development are local production projects of foreign brands and the increasing demand overall. Almost 75% of the primary market in 2010 will be allocated to foreign brands producing in Russia.
A substantial share of the market is, of course, captive. Car manufacturers tend to co-operate with suppliers on a worldwide basis, so as to minimize co- ordination efforts, ensure quality and reduce prices. Nevertheless, given the mar- ket dynamics in Russia, there are also substantial opportunities to establish co- operation with new brands in the primary market. For foreign component suppliers, also Russian car brands are an option. For example, the UAZ Patriot is equipped with Bosch, Almet, Goetze, INA, LuK and Rubena components. In total, given the current structure of suppliers in Russia, there is a large potential in metal parts, tyres, glass, accumulators and engine components.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
12,0 11,0 10,0 9,0 8,0 8,3 7,0 6,4 6,0 4,4 5,0 2,9 4,0 1,7 0,3 0,7 0,8 3,0 0,1 2,0 3,5 2,8 3,1 3,3 3,3 3,3 3,4 3,4 3,4 1,0 0,0 2002 2003 2004 2005 2006 F2007 F2008 F2009 F2010
Russian Foreign
Figure 41: Automotive Parts Market for Russian and Foreign Brands, USD bn., 2002-2010 Source: Globis Today there are over 200 component manufacturers in the Russian automo- tive industry, both of Russian and of foreign origin. The Russian manufacturers have been associated with lower quality and, in the past, have not been the first choice for foreign brands producing in Russia. With local car brands under pres- sure due to low quality, less attractive offers and foreign competition in the low-end sector, Russian component manufacturers are threatened to loose even local brands as their customers. Hence, Russian component suppliers are investing heavily to improve efficiency, quality and innovation. Some of them already supply components to foreign brands assembling in Russia. Major Russian suppliers are listed in Figure 42.
Region Enterprise Production Supplies to
Ivanovo Avtoagregat Knots and details of brake system, VAZ, UAZ, LuAZ, KamAZ, Region (Kineshma) suspension, body, steering PAZ, TRW
Vladimir AvtoPribor Instrument clusters, windshield wiper VAZ, GAZ, IzhAuto, UAZ, Region systems, sensors, other automotive KAMAZ, Ford, abroad exports electrical products
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Region Enterprise Production Supplies to
Osvar Car lightening: internal lights, head- GAZ, AvtoVAZ, UAZ, KamAZ, (Vyazniki, lights, braking lights, lamps ZMA, UralAZ, SeAZ, abroad SOK Group) exports
Chuvashia Elara Ignition systems; climate control sys- Various Russian enterprises Republic tems; signal and control systems for automotive and aircraft industries
ZEiM-Line Car electronics: controllers for fuel AutoVAZ, GAZ, UAZ, after- (Cheboksary) injected engines, immobilizers; diag- market nostic equipment for electronic sys- tems
Samara Energotech- Bumpers, bumper beams, stampings AvtoVAZ, Avtoagregat, Region mash made from thin sheet steel, plastic Vazinterservis, DSK, aftermar- (Zhigulevsk) components ket
DSK (Toljatti) Fuel tanks, carpeting, window raisers, AvtoVAZ, GM-AvtoVAZ, Ford window glass, metal parts miscellane- Motor Company, Vazinter-
ous components servis, IzhAvto, SeAZ, ZMA
Polimerstroym Trunk carpets AvtoVAZ, GM-AvtoVAZ, aterialy GAZ (Otradnoye)
Samaraavto- Auto wiring assemblies, windshield AvtoVAZ, ZAZ, others zhgut washer systems, door lock wiring
Samara Cable Cables, wire VAZ, GAZ, other Company
Kaluga Kaluga Plant Ventilators, electric window lifts, AvtoVAZ, GAZ, KAMAZ, Region of Automotive starters, etc. UAZ, ZIL, LIAZ, IzhMASH Electrical
Equipment
Plant Sensors, relay, etc. Russian and CIS car manufac- "Autopribor" turers
Kursk Region Kursk Bearing Bearings AvtoVAZ, GAZ, KamAZ, UAZ, Company ZMZ, exports
Oryol Region Orleks Sensors, relays, thermostats, etc. Various enterprises
Nizhny Avtotechnika Floors, ceilings, trunk coverings and GAZ, Ford Motor Company, Novgorod sound insulation panels GM-AvtoVAZ Region GAZ, Lear Corporation, Johnson Soteks Car seats, polyurethane foam and Controls, AvtoVAZagregat, plastic part ZMA ( Ssang Yong)
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Region Enterprise Production Supplies to
ZMZ (part of Gasoline and diesel engines, engine GAZ, UAZ, ZMA (Fiat) SeverStal Auto bearings Group)
Bor Glass Glass, windshields etc. Russian car manufacturers; GM Company AvtoVAZ, Ford Motor Compa- ny
Belgorod Soate (Stary Automotive electronics; injection GAZ, AvtoVAZ, UAZ, Region Oskol) systems, and ignition systems IzhMash, KamAZ, ZMZ, others
Saint- Avtoarmatura Car antennas, ignition switches and GAZ, AvtoVAZ, KamAZ, ZIL, Petersburg other switches, other electrical and UAZ, IzhAvto, MAZ and KrAZ Region plastic components
Intercos Automotive body panel dies, tools Volkswagen, Ford Motor Com- large sized stamping, stampings and pany, Daewoo Motor, Hayes mouldings for automotive and other Lemmerz, Caterpillar industries
Toplivnye Carburettors, fuel pumps, engine man- Pierburg; negotiations with Systemy agement systems Ford, VW, Skoda, Bosch
Chelyabinsk TREK (Miass) Control arms silent blocks, oil filters, AvtoVAZ, GAZ Region suspension details
Figure 42: Major Russian Component Suppliers Source: Globis There is a substantial number of foreign component suppliers in Russia al- ready. New participants are also about to enter the market, partly forced through car brands they depend upon. Figure 43 gives an overview over major foreign component suppliers in Russia.
Car component production projects Region Active Announced
Moscow IHI Inergy (supplies to Renault, Nissan, others) Pilkington Stadco (punching, supplies to Severstal) Glaverbel (glass, supplies to Ford, GM- AntoVAZ) Michelin (supplies to Ford)
St. Petersburg ThyssenKrupp Kirchhoff Automotive (supplies to Ford)
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Car component production projects Region Active Announced Stadco Toyota (supplies of its own produc- tion) Nokian Tyres (supplies to Ford) Magna (mouldings, supplies to AutoVAZ, GAZ and foreign production lines) Johnson Controls (seats, supplies to Ford, Hyundai)
Kaluga Region Siemens VDO Automotive Bosal (supplies to Renault, VW, others)
Ryazan Region Magneti Marelli (headlights, supplies to AvtoVAZ, GM-AvtoVAZ, GAZ, UAZ)
Nizhny Novgorod Lear Corporation Ficosa (joint venture with Auto- Region component; supplies to Renault, Faurecla Ford, Toyota, Volkswagen) ThyssenKrupp EDAG Magna Knorr-Bremse Glaverbel Gruppo Magnetto (moldings for VW)
Saratov Region Bosch (fuel injection systems, supplies to (Engels) AvtoVAZ, GM-AvtoVAZ)
Samara Region Hayes Lemmerz WOCO Delphi (banded cables for AvtoVAZ, GM- Avtovaz, Ford) HCC (Toljatti)
Kazan Region Siemens VDO Automotive (Tschistopol; car- (Tatarstan Repu- tridges, tahometres, supplies to AvtoVAZ, blic) GM-AvtoVAZ, Kamaz) Stadco ZF (gear boxes, supplies to Kamaz) Cummins (Naberezhnye Chelny; diesel en- gines, supplies to Kamaz)
Yekaterinburg Tenneco (exhaust systems, filters, supplies to GM-AvtoVAZ) Federal Mogul Johnson Controls Asahi Glass Company
Figure 43: Foreign Component Supplier Projects in Russia
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Source: Globis Suppliers tend to settle around the assembly or production units of car makers. Currently, production clusters have been formed in St. Petersburg, Nizhny Novgo- rod, Samara, Kaluga and Tatarstan Regions.
4.1.2 Secondary Market
The secondary market, that is spare parts build into cars because of routine replacements or break downs, is scattered. There is a distribution system with many options for customers to buy spare parts (see chapter 4.2, p. 63), either di- rectly or as part of a service.
The market for spare parts is determined by many factors:
Quality of cars, spare parts, fuel and lubricants used Service center system Regulations, like mandatory routine inspection Road conditions Climate Availability of faked products Availability of independent aftermarket products
The quality of materials, fuel and lubricants produced in Russia is, on aver- age, rather substandard compared to Western Europe and North America. This leads to shorter life cycles of components and parts on average. For example, a fuel filter in Russia has to be replaced in a much shorter time period than in coun- tries with better quality of fuel. We expect this driver to loose its relevance only slowly.
A comparatively large share of repair and maintenance services in Russia is delivered by small repair garages, mostly not officially registered as a business. Self-repair is also relatively widespread. The main reason for this repair channel is low cost. The preferred methods of repair of these channels is to fix a problem somehow – if possible without the use of new spare parts or through used parts. If new parts are needed, the preferred choice is faked products (mostly in case of Russian brands) and non-original parts. This has a solid impact on the spare parts
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 market, in terms of parts used and the cash-volume of the market. Depending on the component or part, this service channel reduces the market substantially. In the case of older models, the shortage of supply of spare parts also contributes to work-arounds.
The “Rules of Technical Inspection for Transport Vehicles” (see chapter 3.1.1, p. 19) provide for cars to be checked regularly. These checks comprise mainly basic function tests, like the functioning of the brake, steering and lightning systems. These rules influence the spare parts market. In order to pass the tests, parts which are not sufficient anymore but otherwise still in use, are exchanged in the course of preparation for the test. The Rules still provide for some (but not much) growth potential of the spare part market, since in some cases the neces- sary certificates are handed out without any checks. With more strictly enforced regulations, more parts will be needed.
Road conditions are, especially in the country side, hazardous in most re- gions. Russia as a country is just too large and some distances just too far to bring and keep roads in a solid shape. The climate is another factor which leads to a much faster deterioration of pavements. Even though there are heavy investments into the road network in Russia, the conditions of Russian roads will remain a driv- ing factor for the spare parts market. Due to this reason, shock-absorbers are one of the biggest spare part markets in Russia.
Climate, as mentioned before, is an important factor in understanding the Russian spare part market. The unfriendly climate especially in the Eastern re- gions (which, compared to Western European standards, is to be found in Moscow already) leads to a faster deterioration of the roads. Individual parts, however, are also affected strongly by the climate. Most of them simply wear out faster at aver- age winter temperatures of -15 to -20 ºC. We estimate, that parts need to be re- placed at a rate of 20% earlier (all other things equal), compared to Western Eu- rope.
Faked components and spare parts are a major characteristic of the Russian automotive parts market. The data on falsification of original spare parts is striking:
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 in the case of Russian brands, every second one is faked, with the most of them produced in China or less often in Turkey. In the case of foreign brands, 80% of spare parts are considered to be of original quality (OEM and IAM). The less com- plex a part is, the more likely it is faked. Widespread falsifications include small details like filters, plugs, radiators, rubber parts, as well as of expandable materi- als. The total market of faked parts is estimated at 2 bn. USD. There are strong efforts, led by the National Association of Automotive Component Manufacturers, to reduce the volume of falsification. However, in a vast country like Russia one can not expect a dramatic change of the situation in the foreseeable future. Faked parts, of course, are offered at a much lower price. This is only partly offset through their lower quality, increasing the quantity of incidents to replace these parts.
Apart from faked products, there is a large independent aftermarket in Rus- sia. Today, most spare parts used are not original. The vast majority of services is delivered through other service channels than the original service centers. These service centers prefer IAM-products to reduce cost. Sometimes they invoice origi- nal quality and build in IAM-products. In many instances, a customer even brings in IAM-parts to the service center (and purchases only the service), which he bought at a spare part shop by himself. Additionally, the shortage of original parts in some regions strengthens the independent market. Today, there is a trend to- wards a better supply with original parts and towards using more original parts, which will slowly change the market. However, we expect a very strong independ- ent aftermarket in the future.
In total, parts are replaced 10% more frequent than in Western Europe, with peaks of up to 100% for certain parts. The pricing of parts is diverse, with a huge price span from faked, over IAM, to OEM parts.
Based on our market model, the total spare part market in Russia in 2006 was around 7,9 bn. USD (Figure 44). Based on today’s pricing, this market will grow at a rate of almost 14% to 13,3 bn. USD in 2010, driven by an increase in the car parc and the factors discussed above. The growth of the market will be through parts for foreign brands only; this market segment will grow at a rate of 30% until
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 2010. The market for parts for Russian brands will stagnate over this time period. These numbers include the market for tyres, but exclude lubricants.
14 13,3
12 11,5 9,9 10 8,6 7,9 7,8 8 6,1 6 4,6 4 3,3 2,7
2
0 2006 2007 2008 2009 2010
Spare Parts for Foreign Cars Total Market
Figure 44: Size of Russian Spare Parts Market, USD bn., 2006-2010 Source: Globis
4500 310 4000 389
3500 242 390
3000 302 552 Brake Disks 183 305 Mufflers 2500 618 Batteries 226 431 2000 132 231 Shock-Absorbers 480 326 Brake Shoes 110 162 1500 167 Tyres 133 360 139 236 1000 196 259 2.120 213 1.661 1.259 500 759 914
0 2006 2007 2008 2009 2010
Figure 45: Spare Parts for Foreign Cars: Top-6 Positions, USD mio., 2006-2010 Source: Globis
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 The top markets are, in order of size, tyres, brake shoes, shock-absorbers, bat- teries, mufflers and brake disks (Figure 45). The ranking is strongly connected to the conditions in Russia: road conditions and climate affect all parts listed above.
The market for individual components is also driven through parts for foreign cars (for example, see Figure 46 and Figure 47 for markets for brake shoes and shock absorbers). The market for parts for Russian cars almost stagnates, in ac- cordance with stagnating sales of Russian brands (see Figure 12, p. 18)
2010 411 618
2009 408 480
2008 404 360
2007 400 259
Russian 2006 390 213 Foreign
0 200 400 600 800 1000
Figure 46: Market for Brake Shoes, Foreign & Russian, USD mio., 2006-2010 Source: Globis
2010 395 552
2009 392 431
2008 388 326
2007 385 236
Russian
2006 375 196 Foreign
0 200 400 600 800 1000
Figure 47: Market for Shock Absorbers, Foreign & Russian, USD mio., 2006-2010 Source: Globis
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 4.2 Distribution System for Spare Parts
There are numerous options for consumers to get service and spare parts in Russia (see Figure 48). However, the car service market today is not fully devel- oped if measured by Western European standards. The cars-to-service-stations- ratio is much less than in Europe: there are about 7.000 stations for about 30 mio. vehicles in Russia, which is about 4.300 cars per station; in Moscow, there are about 1.500 cars per service station. To compare, in the EU, there are 650 cars per station on average.
Figure 48: Distribution System for Spare Parts in Russia Source: Globis As in other markets as well, pricing in the car-service-sector is not transpar- ent. There are substantial differences in pricing of selected services and needed spare parts (see Figure 49).
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Official Audi Official SC Independent Independent SC “War- “Audi Centre SC “Tur- SC “VDV” Service Pricing (in Rouble) shavka“ Sever“ (Rolf bostars” (spe- (specialization Group) cialization on on VW Group) Audi)
Replcement of the tooth belt and 16.556 28.318 14.700 14.000 pump for V630V engine
Replacement of front levers for A6 15.390 61.910 17.060 27.000
Replacement of turbine for l,8Т en- 62.400 55.067 30.500 31.000 gine
Replacement of suspension parts on 40.150 64.238 50.000 50.000 Audi Allroad
Figure 49: Pricing of Service Centers on Selected Services, 2006 Source: Commersant-Auto Spare parts for foreign brands are imported to Russia by official brand import- ers as well as independent importers. Importers normally have a partnership agreement with spare part manufacturers or big warehouses abroad. Most import- ers use central and regional warehouses for efficient delivery. In rare cases they order only on demand, without having warehouses. Some importers also engage in retail and service business. Figure 50 gives an overview over large selected importers of foreign spare parts.
Company Business Focus Brands
Auto-1 Importer and distributor of OE and Ate, Autolite, Ava, Bendix, Beru, aftermarket from Germany, Japan, Bilstein, Bosal, Brembo, Clean,
OAE, USA Cobra, Facet, Febi, Federal Mogul, Fram, Gabriel, Geri Glo Hueco, Kayaba, Lemforder, Luk, Meyle, Ngk, Quinton, Hazell Reinz, Rem- sa, Stabilus, Suzuki, Walker, Yamaha, etc.
ABC Parts Importer and wholesale supplier of Mostly original parts; over 60.000 spare parts for foreign PCs and Articles trucks
AKA Importer of OE and aftermarket Spare parts from VAG, BMW, from Germany Opel; Toyota, Mitsubishi, Subaru
(Europe)
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Company Business Focus Brands
AMT Large importer and supplier of Mopar, Motorcraft, ACDelco, spare parts, active in the CIS mar- Bendix, Fram, Depo, Vestion,
kets: Russia, Ukraine, Belarus Moog, Timken, Automotive, TRW, Federal Mogul, Sealed Power, Fel-Pro, SKF, Transbec, Raybestos, Monroe, Walker, etc.
ANP Service Internet Shop Official dealer of Bosch spare parts; 50 brands from leading
spare part manufacturers
Avtodor FV Sales organization of OE and af- OE for cars of VW-Group termarket with its own service
station
AZA Importer and supplier of spare OE and aftermarket for Japan and parts from Germany, United Ara- European cars
bian Emirates; internet-project
Berg Importer and supplier of car spare TRW (Lucas), ThyssenKrupp parts, automotive service and di- (BILSTEIN), Wynn’s Belgium
agnostic equipment, warehouse N.V., NGK, MANN+HUMMEL, equipment from leading global ContiTech, Rosss (warehouse manufacturers equipment), Rancho, Gartec, Im- pact; over 10 mio. Articles.
Exist One of the largest Russian Internet Over 300 suppliers, 500 brands, 12 spare parts shops mio. articles
Fortune Wheel Delivery of OE from Europe and Beru, Boge, Bosch, Brembo, United Arab. Emirates; spare parts Bosal, Koyo, etc.
from large European warehouses
Mikado Wholesale supplier of spare parts Official distributer of aftermarket: for foreign cars Febi, Jurid, Luk, Elring, Mahle,
Bremi, SKF, Kayaba, Denso, Aisin, 555, Nissens, Valeo, Mag- neti Marelli, Metelli, Dayco, UFI, etc. and OE
Profplus Large spare parts supplier active in Valeo,Sachs, Luk, Skf, Beral, the CIS markets; specialization on Peters, Febi, Haldex, Zf, Glico,
trucks and buses Ks, Mahle, Knecht, Hella, Airtech, Lumag, etc. and OE for Mercedes- Benz, Man, Volvo, Iveco, Scania, Daf, Setra, Neoplan, Renault, etc.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Company Business Focus Brands
Ricambi Large importer of spare parts and Mahle, Swag, Glo, Contitech, accessories for foreign and Rus- Tesla, Beru, Valeo, Mapco, Day-
sian cars co, Ufi, Optimal, Elring, Kayaba, Sofima, Allied Nippon, etc. Special focus on OE for Volkwagen-Audi-Skoda-Seat
Trans-Parts Importer and supplier of spare Spare parts for Scania, Volvo, parts for European trucks; direct Mercedes, MAN, DAF, Iveco, supplies from manufacturers and Renault trucks warehouses in Europe (Poland, Germany, Finland etc.)
Vita M Importer of spare parts for PCs Official distributor of TRW / Lu- and trucks with specialization on cas, General Ricambi, Nuova
brake system, filters, steer- Tecnodelta, All Brake Systems, ing/suspension Mahle / Knecht Boge, Sachs, Febi, etc.
Figure 50: Large Spare Parts Importers and Wholesalers in Russia Source: Globis Consumers get access to spare parts in several ways:
1. Official service centers
2. Independent service centers
3. Spare part shops
4. Internet shops
5. Repair shops
6. Open-air-markets.
Official car dealers provide repair and maintenance services and offer a complete range of original spare parts (“official service centers”). Official service centers receive spare parts mostly from official importers, distributed through cen- tral and regional warehouses. Even though the availability of spare parts for for- eign cars has dramatically improved, there are still shortages from time to time, depending on the part and the location of the center. Hence, in some cases, offi- cial service centers purchase from independent importers or even independent spare part shops. If possible, they exchange parts with other official dealers. There
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 are still cases of official service centers, where faked parts or non-official parts are used. However, since this is a risky business for official centers, this practice is rarely used today.
Independent service centers get their spare parts from the independent af- termarket as well as from importers of OEM-parts. These service centers special- ize in the provision of repair and maintenance services, mostly not limited to any brands. It is not unusual to bring in your spare parts and just buy the service at these independent centers. There are still not many large service chains in Russia. Large parts of the country are not covered well. Figure 51 gives an overview over larger chains of independent service centers.
Company Region No. of Service Stations
Alarm St. Petersburg 30
Bosch Autoservice (franchise) Russia-wide 200
Every Car Service (franchise) Moscow 8
Union St. Petersburg 28
Euro Auto St. Petersburg 4 service stations, 13 spare part stores
Michelin Russia-wide 70
MVO Moscow, St. Petersburg 22
Figure 51: Chains of Independent Service Centers in Russia Source: Globis Spare part shops mostly sell independent aftermarket parts but do also have original parts. Faked parts are also sold, but not officially. The shops sometimes specialize in brands, sometimes in certain components. The trend is, however, to offer a range of parts as broad as possible. These shops do not provide any ser- vices but act as a retailer. Frequently, they also have an internet-shop and sell countrywide.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Internet-shops are often used as a secondary sales channel of normal spare part shops. For these shops the internet will in many cases become the main sales channel. Today, delivery to the customer is the main problem, since the logistics system is not fully developed yet. Internet-shops usually sell independent after- market parts, in some cases also original equipment.
To get one’s car serviced, there are also small repair shops, which partly are privately run and not officially registered as a business. They are numerous, espe- cially in the country-side. These shops mostly provide service for many brands, sometimes, however, they are “specializing” in a single brand. Their main argu- ment is low prices and depending on the region, their pure presence, since some regions are not covered by official or larger independent service centers. These repair shops organize spare parts through normal channels, but rarely provide original parts. They mostly use faked parts or parts from the independent after- market.
Open-air-markets, where second-hand cars are sold, are also a supply source for parts. Often the parts of dismantled used cars and faked parts are sold on such markets. Given the price of original equipment, for many consumers these markets are still attractive, although potential difficulties with the parts bought are well known. New original equipment is rarely sold on such markets.
The relevance of these channels for reaching customers differs greatly. Overall, car service in Russia is provided mainly through independent service centers (60%), followed by small repair shops (less than 20%) and official service stations (less than 10%). Self repair accounts for approximately 15%. The distribution channels for spare parts, however, differ strongly: Figure 52 shows the results of a survey with around 1.000 participants. Spare part shops are the most preferred channel (both for foreign and Russian brands) – by almost 50% of all consumers. This shows the Russian mentality to buy spare parts on their own and to repair their car themselves or through independent service centers and smaller repair shops, where they bring in their parts. Open-air-markets are still a major source of supplies, with around 14% of consumers using this channel.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Spare parts shop 46,1%
Service center 29,4%
Open-air market 13,8%
Internet 7,2%
Other 3,3%
0% 10% 20% 30% 40% 50%
Figure 52: Where Russians Buy Spare Parts, 2006 Source: autonews.ru
Independent 25,9% service center
Service center of 21,8% the official dealer
Independent specialized service 21,5% center
I get my foreign car repaired by 15,5% myself
Garage service 12,6%
Any kind of service 2,8% I find first
0% 5% 10% 15% 20% 25% 30%
Figure 53: Where Russians Get Their Foreign Car Repaired, 2006 Source: auto.ru
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 In order to get a foreign car repaired, the picture differs slightly from the overall situation (see Figure 53): Consumers use more official service centers (over 20%). Independent service centers account for a share of almost 50%. 15% state, that they would repair the car themselves. Smaller repair shops are used at the same level to repair a foreign car than in Russia in total.
4.3 Consumer Behaviour Regarding Car Service and Spare Parts
The preference of consumers differs, when it comes to the usage of original or independent aftermarket spare parts. 30% would only use original spare parts and 5% would never use original parts. The majority decides by the type of the part. The less critical and complex the part is, the more they decide for cheaper non- original parts. Figure 54 shows the details.
Depends on the 58,0% spare part
Only original 30,0%
Does not matter 7,0%
Hardly ever original 5,0%
0% 10% 20% 30% 40% 50% 60% 70%
Figure 54: Consumer Preferences: Original or Independent Aftermarket Spare Parts, 2006 Source: ricambi.ru The choice to use original or non-original parts can also be explained through the age of the car. Whereas the great majority of owners of new cars use mostly
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 original spare parts, the holders of older cars more often decide in favour of non- original parts.
Owners of new cars are ultimate consumers of original equipment: if services are provided on the basis of a guarantee, original parts are used. Also, if an ex- change is necessary but not on the basis of a guarantee, the usage of original parts may be crucial to ensure the validity of the guarantee, since it is the strict requirement of a car dealer for the guarantee service. Even if new cars are bought through non-official dealers, customers mostly prefer to use original parts, when the car is still comparatively young.
Less then 100 USD 50,6%
100-200 USD 27,5%
Over 1000 USD 11,3%
200-500 USD 6,3%
500-1000 USD 4,4%
0% 10% 20% 30% 40% 50% 60%
Figure 55: Monthly Expenditures on Car Repair and Maintenance, 2006 Source: avtogarant.ru The older the car gets (or if bought second-hand), the more owners are will- ing to substitute original parts through non-original parts. This is simply a matter of cost-effectiveness: people are less willing to spend the high price for original parts for a car, which is reduced in value through its age. In addition, the older the car gets, the more difficult it is to find new original parts. However, there is a group of consumers who would never use non-original parts. This group consists of wealthy
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 consumers, who normally get a new car in less than 5 years time. Using original parts then also is an argument for a higher price when selling to official dealers.
The other arguments for and against original parts are the same as in other countries: original parts, on the one hand, are mostly of better quality, are built to suit (hence there is a lower rate of following defections) and normally come with a guarantee. On the other hand, they are costly. An additional problem in the Rus- sian market also is that original parts are not always readily available. This situa- tion is improving, coming from 2 to 4 weeks waiting time in 2005 to get the desired original parts.
Looking at the monthly expenditures of consumers on service including spare parts the numbers (see Figure 55) indicate a widespread use of cheaper non- original or faked parts.
In Russia, there are clearly preferred providers of independent aftermarket spare parts, depending on the component. For example:
Break disks: Ate (57%), followed by Brembo (13%) Break shoes: Lucas (50%), followed by Textar (15%) Shock-Absorbers: Bilstein and Kayaba (32% each), followed by Sachs (14%).
In case of more complex parts like elements of suspension, consumers pre- fer original parts.
Given the growth of the market and the still changing distribution system, there are good opportunities for foreign parts manufacturers to enter the market.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 5 Appendices
5.1 Districts and Regions in Russia
Federal District Regions included
Central Belgorod Region Lipetsk Region Tula Region Bryansk Region Orel Region Vladimir Region Ivanovo Region Ryazan Region Voronezh Region Kaluga Region Smolensk Region Yaroslavl Region Kostroma Region Tambov Region Moscow Region Kursk Region Tver Region Moscow
Southern Adygea Republic Kabardino-Balkaria Re- North Osetia Republic public Astrakhan Region Stavropol Region Kalmyk Republic Chechnya Republic Rostov Region Karachaevo-Cherkessia Dagestan Republic Volgograd Region Republic Ingushetia Republic Krasnodarskiy Region
North-Western Nenetskiy Autnomous Arhangelsk Region Novgorod Reigon Region Kaliningrad Region Pskov Region Karelia Republic Leningradskiy Region Vologda Region Komi Republic Murmansk Region Saint-Petersburg
Urals Khanty-Mansijskiy Au- Kurgan Region Tyumen Region tonomous Region Sverdlovsk Region Chelyabinsk Region Yamalo-Nenetskiy Auto- nomous Region
Volga Bashkortostan Republic Tatarstan Republic Perm Region Chuvash Republic Kirov Region Samara Region Mari El Republic Nizhny Novgorod Re- Saratov Region gion Udmurt Republic Ulyanovsk Region Orenburg Region Mordovia Republic Penza Region
Siberian Tuva Republic Aginskiy-Buryatskiy Krasnoyarsk Region Autonomous Region Altai Republic Novosibirsk Region Chita Region Buryatia Republic Omsk Region Irkutsk Region
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Federal District Regions included Khakasia Republic Kemerovo Region Tomsk Region Ust-Ordynskiy Autono- Altai Region mous Region
Far Eastern Koryakskiy Autonomous Sakha Republic Magadan Region Region (Yakutia) Sakhalin Region Jewish Autonomous Amur Region Primorskiy Region Region Kamchatka Region Chukotka Autonomous Khabarovsk Region Region
5.2 Population and Area in Regions
Region Population (October 2002) Area Density Federal district 1 Moscow 10.382.754 1.000 10.382,75 Central 2 Moscow Region 6.618.538 46.000 143,88 Central 3 Krasnodar Region 5.125.221 76.000 67,44 Southern 4 Saint-Petersburg 4.661.219 600 7.768,70 North-Western 5 Sverdlovsk Region 4.486.214 194.800 23,03 Urals 6 Rostov Region 4.404.013 100.800 43,69 Southern 7 Bashkortostan Republic 4.104.336 143.600 28,58 Volga 8 Tatarstan Republic 3.779.265 68.000 55,58 Volga 9 Chelyabinsk Region 3.603.339 87.900 40,99 Urals Niszhniy Novgorod 10 3.524.028 74.800 47,11 Volga Region 11 Samara Region 3.239.737 53.600 60,44 Volga 12 Krasnoyarsk Region 2.966.042 2.339.700 1,27 Siberian 13 Kemerovo Region 2.899.142 95.500 30,36 Siberian 14 Perm Region 2.819.421 160.600 17,56 Volga 15 Stavropol Region 2.735.139 66.500 41,13 Southern 16 Volgograd Region 2.699.223 113.900 23,7 Southern 17 Novosibirsk Region 2.692.251 178.200 15,11 Siberian 18 Saratov Region 2.668.310 100.200 26,63 Volga 19 Altaiskiy Krai 2.607.426 169.100 15,42 Siberian 20 Dagestan Republic 2.576 531 50.300 51,22 Southern
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Region Population (October 2002) Area Density Federal district 21 Irkutsk Region 2.446.378 745.500 3,28 Siberian 22 Voronezh Region 2.378.803 52.400 45,4 Central 23 Orenburg Region 2.179.551 124.000 17,58 Volga 24 Omsk Region 2.079.220 139.700 14,88 Siberian 25 Primorsk Region 2.071.210 165.900 12,48 Far Eastern 26 Tula Region 1.675.758 25.700 65,2 Central 27 Leningradskiy Region 1.669.205 85.300 19,57 North-Western 28 Udmurtia Republic 1.570.316 42.100 37,3 Volga 29 Vladimir Region 1.523.990 29.000 52,55 Central 30 Belgorod Region 1.511.620 27.100 55,78 Central 31 Kirov Region 1.503.529 120.800 12,45 Volga 32 Tver Region 1.471.459 84.100 17,5 Central 33 Penza Region 1.452.941 43.200 33,63 Volga 34 Khabarovsk Region 1.436.570 788.600 1,82 Far Eastern Khanty-Mansijskiy 35 1.432.817 523.100 2,74 Urals Autonomous Region 36 Ulyanov Region 1.382.811 37.300 37,07 Volga 37 Bryansk Region 1.378.941 34.900 39,51 Central 38 Jaroslavl Region 1.367.398 36.400 37,57 Central 39 Tyumen Region 1.325.018 161.800 8,19 Urals 40 Chuvashia Republic 1.313.754 18.300 71,79 Volga 41 Arhangelsk Region 1.294.993 410.700 3,15 North-Western 42 Vologda Region 1.269.568 145.700 8,71 North-Western 43 Kursk Region 1.235.091 29.800 41,45 Central 44 Ryazan Region 1.227.910 39.600 31,01 Central 45 Lipetsk Region 1.213.499 24.100 50,35 Central 46 Tambov Region 1.178.443 34.300 34,36 Central 47 Ivanovo Region 1.148.329 23.900 48,05 Central 48 Chehenian Republic 1.103.686 15.000 73,58 Southern 49 Chita Region 1.083.133 412.500 2,63 Siberian 50 Smolensk Region 1.049.574 49.800 21,08 Central 51 Tomsk Region 1.046.039 316.900 3,3 Siberian 52 Kaluga Region 1.041.641 29.900 34,84 Central 53 Kurgan Region 1.019.532 71.000 14,36 Urals 54 Komi Republic 1.018.574 415.900 2,45 North-Western 55 Astrakhan Region 1.005.276 44.100 22,8 Southern
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Region Population (October 2002) Area Density Federal district 56 Republic of Buryatia 981.238 351.300 2,79 Siberian 57 Kaliningrad Region 955.281 15.100 63,26 North-Western 58 Sakha Republic 949.280 3.103.200 0,31 Far Eastern 59 Amur Region 902.844 363.700 2,48 Far Eastern Kabardino-Balkaria 60 Republic 901.494 12.500 72,12 Southern 61 Murmansk Region 892.534 144.900 6,16 North-Western 62 Mordovia Republic 888.766 26.200 33,92 Volga 63 Orel Region 860.262 24.700 34,83 Central 64 Pskov Region 760.810 55.300 13,76 North-Western 65 Kostroma Region 736.641 60.100 12,26 Central 66 Mari El Republic 727.979 23.200 31,38 Volga 67 Karelia Republic 716.281 172.400 4,15 North-Western Republic of North 68 710.275 8.000 88,78 Southern Osetia 69 Novgorod Region 694.355 55.300 12,56 North-Western 70 Sakhalin Region 546.695 87.100 6,28 Far Eastern 71 Khakasia Republic 546.072 61.900 8,82 Siberian Yamalo-Nenetskiy 72 507.006 750.300 0,68 Urals Autonomous Region 73 Republic of Ingushetia 467.294 4.300 108,67 Southern 74 Adygea Republic 447.109 7.600 58,83 Southern Karachaevo-Cherkessia 75 439.470 14.100 31,17 Southern Republic 76 Kamchatka Region 333.644 170.800 1,95 Far Eastern 77 Tuva Republic 305.510 170.500 1,79 Siberian 78 Kalmykia Republic 292.410 76.100 3,84 Southern 79 Altai Republic 202.947 92.600 2,19 Siberian Jewish Autonomous 80 190.915 36.000 5,3 Far Eastern Okrug 81 Magadan Region 182.726 461.400 0,4 Far Eastern 82 Ust-Ordynskiy Region 135.327 22.400 6,04 Siberian Aginskiy-Buryatskiy 83 72.213 19.000 3,8 Siberian Region 84 Chukotka Region 53.824 737.700 0,07 Far Eastern Nenetskiy Autonomous 85 41.546 176.700 0,24 North-Western Region 86 Koryak Region 25.157 301.500 0,08 Far Eastern
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 5.3 Major Russian Cities
Cities over 100.000 inhabitants 2006 (in 1.000) 2005 (in 1.000)
1 Moscow 10.425 10.407 2 St. Petersburg 4.581 4.600 3 Novosibirsk 1.397 1.406 4 Yekaterinburg 1.308 1.304 5 Nizhny Novgorod 1.284 1.289 6 Samara 1.143 1.133 7 Omsk 1.139 1.143 8 Kazan 1.113 1.110 9 Chelyabinsk 1.093 1.095 10 Rostov-on-Don 1.055 1.058 11 Ufa 1.030 1.036 12 Perm 993 989 13 Volgograd 992 999 14 Krasnoyarsk 921 917 15 Saratov 850 858 16 Voronezh 846 849 17 Krasnodar 710 715 18 Toljatti 705 705 19 Izhevsk 620 623 20 Ulyanovsk 617 623 21 Jaroslavl 604 605 22 Barnaul 604 631 23 Vadivostok 584 587 24 Irkutsk 578 583 25 Habarovsk 578 579 26 Novokuznetsk 562 563 27 Tyumen 543 538 28 Orenburg 534 539 29 Kemerovo 520 523 30 Ryazan 513 516 31 Penza 510 513 32 Tula 509 466 33 Naberezhnye Chelny 507 508
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Cities over 100.000 inhabitants 2006 (in 1.000) 2005 (in 1.000)
34 Lipetsk 503 503 35 Astrachan 499 501 36 Tomsk 490 487 37 Kirov 469 449 38 Mahachkala 466 465 39 Cheboksary 442 443 40 Kaliningrad 424 426 41 Bryansk 420 424 42 Ivanovo 413 418 43 Magnitogorsk 413 417 44 Kursk 406 406 45 Tver 406 407 46 Nishniy Tagil 380 383 47 Stavropol 358 356 48 Arhangelsk 350 352 49 Ulan-Ude 348 353 50 Belgorod 344 341 51 Vladimir 341 310 52 Kurgan 330 334 53 Sochi 330 329 54 Kaluga 329 329 55 Orel 326 329 56 Murmansk 321 325 57 Smolensk 318 319 58 Vladikavkaz 314 314 59 Volzhskiy 309 309 60 Cherepovets 308 309 61 Chita 306 308 62 Saransk 297 299 63 Surgut 291 292 64 Vologda 287 288 65 Tambov 285 287 66 Kostroma 275 276 67 Komsomolsk-on-Amur 273 276 68 Nalchik 271 273
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Cities over 100.000 inhabitants 2006 (in 1.000) 2005 (in 1.000)
69 Taganrog 269 273 70 Sterlitamak 266 265 71 Petrozavodsk 265 266 72 Bratsk 255 257 73 Dzerzhinsk 253 256 74 Joshkar-Ola 251 253 75 Shachty 248 249 76 Orsk 247 248 77 Angarsk 246 248 78 Nizhnevartovsk 241 240 79 Yakutsk 239 236 80 Novorossijsk 231 231 81 Syktyvkar 229 229 82 Nizhnekamsk 227 227 83 Bijsk 225 228 84 Velikiy Novgorod 218 219 85 Staryi Oskol 218 217 86 Grozny 218 216 87 Prokopjevsk 217 219 88 Rybinsk 215 217 89 Noril'sk 213 132 90 Blagoveshensk 212 218 91 Balakovo 199 200 92 Pskov 197 200 93 Severodvinsk 195 197 94 Petropavlovsk-Kamchatskiy 195 196 95 Engels 195 192 96 Armavir 191 192 97 Zlatoust 190 192 98 Kamensk-Uralskiy 183 183 99 Balashiha 183 181 100 Syzran 182 184 101 Podolsk 180 180 102 Novocherkassk 180 181 103 Himki 180 180
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Cities over 100.000 inhabitants 2006 (in 1.000) 2005 (in 1.000)
104 Juzhno-Sakhalinsk 173 174 105 Korolev 173 172 106 Nahodka 172 174 107 Volgodonsk 171 171 108 Berezniki 168 170 109 Abakan 164 165 110 Mytischi 162 162 111 Rubtzovsk 159 160 112 Ljubertzy 159 158 113 Salavat 157 158 114 Maykop 157 157 115 Miass 155 156 116 Ussurijsk 155 156 117 Kovrov 152 153 118 Kolomna 148 149 119 Elektrostal 146 146 120 Almetjevsk 142 142 121 Pyatigorsk 140 140 122 Kopejsk 138 139 123 Pervouralsk 133 133 124 Odintzovo 132 133 125 Nevinnomyssk 130 131 126 Nazran 130 129 127 Kislovodsk 129 129 128 Novomoskovssk 128 130 129 Dimitrovgrad 128 129 130 Novochebocksarsk 126 125 131 Serpuhov 125 127 132 Khasavjursk 125 124 133 Kamyshin 122 124 134 Murom 122 124 135 Orekhvo-Zuevo 122 122 136 Neftekamsk 118 119 137 Cherkessk 117 117 138 Zheleznodorozhniy 117 115
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Cities over 100.000 inhabitants 2006 (in 1.000) 2005 (in 1.000)
139 Noginsk 116 117 140 Novoshahtinsk 115 116 141 Achinsk 113 115 142 Eletz 113 115 143 Sergiev Posad 113 114 144 Schelokovo 113 113 145 Nefteyugansk 113 112 146 Novy Urengoj 113 109 147 Novokuibyschevsk 112 112 148 Kyzyl 109 108 149 Noyabrsk 109 107 150 Leninsk-Kuznetzkiy 108 109 151 Oktjabrskiy 108 108 152 Seversk 108 108 153 Arzamas 107 108 154 Derbent 106 105 155 Obninsk 105 105 156 Bataisk 104 105 157 Novotroitzk 104 105 158 Kiselevsk 104 104 159 Mezhdurechensk 104 103 160 Elista 103 103 161 Uhta 103 103 162 Velikie Luki 102 103 163 Kansk 102 102 164 Artem 102 102 165 Zhukovskiy 101 101 166 Tobolsk 101 101 167 Glazov 100 101 168 Magadan 100 100
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 5.4 Regions by Level of Economic Development
Lipetsk Region Regions with high level of develop- ment (13) Moscow Moscow Region Komi Republic Leningradskiy Region St. Petersburg Bashkortostan Republic Tatarstan Republic Samara Region Sverdlovsk Region Tyumen Region Khanty-Mansijskiy Autonomous Region Yamalo-Nenetskiy Autonomous Region Belgorod Region Regions with level of development higher than on average (15) Smolensk Region Yaroslavl Region Vologda region Kaliningrad region Novgorod Region Perm Region Nizhny Novgorod Region Orenburg Region Chelyabinsk Region Kemerovo Region Omsk Region Tomsk Region Sakhalin Region Chukotka Region Kaluga Region Regions with average level of devel- opment (21) Kursk Region Orel Region Ryazan Region Tambov Region Tver Region Tula Region
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Karelia Republic Nenetskiy Autonomous Region Murmansk Region Pskov Region Krasnodar Region Astrakhan Region Volgograd Region Rostov Region Mordovia Region Chuvashia Republic Ktrasnoyarsk Region Novosibirsk Region Sakha Republic (Yakutia) Magadan Region Bryansk Region Regions with level of development lower than on average (16) Vladimir Region Voronezh Region Kostroma Region Arkhangelsk Region North Osetia Republic Mari El Republic Udmurtia Republic Kirov Region Penza Region Saratov Region Khakasia Republic Irkutsk Region Khabarovsk Region Koryak Autonomous Region Jewish Autonomous Region Ivanovo Region Regions with low level of development (14) Dagestan Republic Kalmykia Republic Karachaevo-Cherkessia Republic Stavropol Region Ulyanov Region Kurgan Region
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Altai Republic Altaiskiy Krai Evenkiyskiy Autonomous Region Chita Region Primorskiy Region Amur Region Kamchatka Region Adygea Republic Regions with very low level of devel- opment (7) Ingushetia Republic Kabadino-Balkar Republic Buryatia Republic Tuva Republic Ust-Ordynskiy (Buryatskiy) Autonomous Region Aginskiy Burjatskiy Autonomous Region
5.5 Regional Passenger Car Parcs
Car parc, Change to Population, Cars/1.000 peo- Region 01.01.2006 01.01.2005 thousand ple
1 Moscow 3.096.661 7,7 10.415,8 297
2 Moscow Region 1.593.606 12,9 6.628,9 240
3 St. Petersburg 1.063 479 9,7 4.590,3 232
4 Krasnodar Region 1.047 412 3 5.098,4 205
5 Bashkortostan Republic 775.913 10,4 4.071,1 191
6 Sverdlovsk Region 748.979 11,4 4.419 169
7 Rostov Region 728.462 4,8 4.318,9 169
8 Samara Region 691.630 4,8 3.195,1 216
9 Chelyabinsk Region 585.070 5,5 3.541,3 165
10 Tatarstan Republic 536.012 6,7 3.765 142
11 Novosibirsk Region 523.162 20,6 2.656,1 197
Nizhny Novgorod Re- 511.988 3,5 3.428,2 149 12 gion
13 Stavropol Region 500.248 3,7 2.714,1 184
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Car parc, Change to Population, Cars/1.000 peo- Region 01.01.2006 01.01.2005 thousand ple
14 Krasnojarsk Region 491.315 11,1 2.859,2 172
15 Voronezh Region 445.297 5,5 2.323,9 192
16 Kemerovo Region 424.266 6,8 2.846,8 149
17 Volgograd Region 416.750 3,7 2.645,4 158
18 Primorsky Region 414.662 3,2 2.027,7 204
19 Altaisky Krai 412.623 -4,3 2.554,4 162
20 Saratov Region 402.970 -0,1 2.617 154
21 Perm Region 402.896 3,8 2.748,2 147
22 Orenburg Region 389.302 2,8 2.144,1 182
Khanty-Mansijsky Au- 363.702 2 1.473,6 247 23 tonomous Region
24 Irkutsk Region 360.388 -11,9 2.402,1 150
25 Omsk Region 326.890 3,4 2.040,6 160
26 Leningradskaya Oblast 310.743 7 1.648,4 189
27 Tula region 298.175 15,8 1.610,8 185
28 Tymen Region 267.932 13,2 1.314,8 204
29 Belgorod Region 252.375 5 1.511,5 167
30 Khabarovsk Region 250.841 3,9 1.416,3 177
31 Udmurtia Republic 248.393 0,3 1.548,6 160
32 Tver Region 236.402 8,4 1.416,1 167
33 Kaliningrad Region 234.371 5,5 942,4 249
34 Vladimir Region 213.744 6 1.479,9 144
35 Vologda Region 213.503 7,2 1.240,4 172
36 Lipetsk Region 212.992 5,7 1.185,4 180
37 Ryazan Region 204.506 5,4 1.188,4 172
38 Kirov Region 203.837 7,2 1.452,1 140
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Car parc, Change to Population, Cars/1.000 peo- Region 01.01.2006 01.01.2005 thousand ple
39 Ulyanov Region 188.458 4,5 1.343,3 140
40 Smolensk Region 188.341 48 1.012,5 186
41 Penza Region 186.462 10,5 1.415,4 132
42 Yaroslavl Region 185.637 7,9 1.333,3 139
43 Tambov Region 181.973 0,3 1.137,6 160
44 Kursk Region 179.422 4,3 1.191,5 151
45 Astrakhan Region 177.533 6,2 996,2 178
46 Kaluga Region 175.923 11 1.017,9 173
47 Kurgan Region 165.979 2,1 986 168
48 Chita Region 163.228 4,6 1.058,2 154
49 Arhangelsk Region 160.334 4,9 1.256 128
50 Komi Republic 159.238 9,5 990,7 161
51 Tomsk Region 157.068 5,2 1.035,4 152
52 Dagestan Republic 155.670 5,1 2.631,4 59
53 Amur Region 153.170 8,1 884,3 173
54 Oryel Region 142.953 10,4 838,1 171
55 Karelia Republic 140.772 -0,9 700,3 201
56 Ivanovo Region 139.070 9,1 1.107,4 126
57 Sakhalin Region 138.458 22,7 529,3 262
58 Murmansk Region 137.759 3,1 868,7 159
Sakha Republic 136.615 5 950,3 144 59 (Yakutia)
60 Chuvashia Republic 121.146 6,6 1.295,8 93
61 Bryansk Region 118.510 4 1.338,9 89
62 Pskov Region 114.333 10,1 730,7 156
63 Republic of Burjatia 113.890 7,6 966,2 118
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Car parc, Change to Population, Cars/1.000 peo- Region 01.01.2006 01.01.2005 thousand ple
Yamalo-Nenetsky Au- 108.244 2,7 527 205 64 tonomous Region
Republic of North Ose- 103.995 9,4 703,4 148 65 tia
66 Khakasia Republic 103.123 -0,4 539,6 191
67 Novgorod Region 101.911 8,9 669,7 152
Kabardino-Balkar Re- 101.857 3,9 895,5 114 68 public
69 Mordovia Republic 100.927 2,5 861,8 117
70 Kostroma Region 100.634 6,6 713,2 141
71 Kamchatka Region 95.140 8,9 327,2 291
72 Mari El Republic 80.789 6,5 714,2 113
73 Adygea Republic 77.047 6,9 443,6 174
Karachaevo-Cherkessk 63.868 5,3 433 148 74 Republic
75 Chechnya Republic 59.259 17,6 1.152,1 51
76 Kalmyk Republic 44.654 1,8 289,3 154
77 Magadan Region 38.900 3,2 173,1 225
78 Republic of Altai 38.866 5,4 204,2 190
79 Republic of Ingushetia 30.704 7,5 484,3 63
Jewish Autonomous 28.904 -2,2 187,7 154 80 Region
81 Tuva Republic 26.118 10,9 308,1 85
Aginsky Burjatsky Au- 16.057 12,2 73,8 218 82 tonomous Region
Ust-Ordynsky (Burjat- sky) Autonomous Re- 14.872 7,5 134 111 83 gion
Nenetsky Autonomous 5.578 10,3 42 133 84 Region
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Car parc, Change to Population, Cars/1.000 peo- Region 01.01.2006 01.01.2005 thousand ple
85 Chukotka Region 3.141 15 50,6 62
Taimyr Autonomous 2.891 1,8 39,2 74 86 Region
87 Koryak Region 992 2,5 23,5 42
Evenkijskiy Autono- 728 8,8 17,3 42 88 mous Region
5.6 Custom Regulation for Car Imports
Current custom regulations are expected to change after access of Russia to the WTO. The access, however, is not expected before end of 2007, and probably might take much longer. Even with access, there will be a transitional period of seven years. During that time, old custom duties will apply. After that, the duties for new cars, for example, will probably drop to 15%.
5.6.1 New Cars
A “new car” if defined to be a vehicle under 3 years old from its production date. New cars imported into the territory of Russian Federation are subject to a 25% customs duty.
5.6.2 Second-hand Cars
“Second-hand cars” are defined as non-new cars. For second-hand cars, im- port duties are levied on the basis of engine volume. Detailed regulations are as follows:
For vehicles between 3 and 7 years old, the following import duties apply:
Engine volume (cm3) Import duty / cm3
=< 1.000 0,85 €
> 1.000 =< 1.500 1 €
> 1.500 =< 1.800 1,5 €
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
> 1.800 =< 2.300 1,75 €
> 2.300 =< 3.000 2€
> 3.000 2,25 €
For vehicles over 7 years old, the following import duties apply:
Engine volume (cm3) Import duty / cm3
=< 2.500 2 €
> 2.500 3 €
5.6.3 Non-Compliance with Euro 2 Norm
If a car does not comply with the Euro 2 norm, it is prohibited to be imported. This affects most European and American cars produced before 1996.
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 5.7 Sales of Foreign Brands in Russia, 2005-2007
Brand 2006 2005 Growth 06/05 Q1 2007 Q1 2006 Growth 07/06
1 Ford 115.985 60.564 92% 39.071 15.950 145%
Chevrolet (incl. 111.458 66.532 68% 36.735 17.564 109% 2 GM-AVTOVAZ)
3 Hyundai 100.685 87.457 15% 22.401 21.930 2%
4 Toyota 95.689 60.638 58% 29.368 15.033 95%
5 Nissan 75.529 46.485 62% 18.441 10.235 80%
6 Renault 72.484 29.177 148% 17.897 10.682 68%
7 Mitsubishi 68.845 55.148 25% 14.748 13.936 6%
8 Daewoo 66.717 48.623 37% 17.033 15.273 12%
9 Kia 59.993 24.671 143% 13.844 10.679 30%
10 Mazda 32.290 21.120 53% 9.378 6.196 51%
11 Opel 19.983 9.398 113% 9.380 2.737 243%
12 Volkswagen 19.186 12.007 60% 5.084 3.245 57%
13 Suzuki 16.118 9.803 64% 5.626 2.716 107%
14 Honda 15.723 8.906 77% 4.524 1.543 193%
15 Peugeot 15.287 9.251 65% 4.217 2.644 59%
16 Skoda 14.835 7.535 97% 5.303 2.206 140%
17 Citroen 11.934 6.922 72% 2.504 2.289 9%
18 Volvo 10.801 5.713 89% 3.320 1.393 138%
19 Lexus 10.065 5.369 87% 2.728 1.521 79%
20 Audi 10.050 6.115 64% 3.020 1.755 72%
21 Mercedes-Benz 9.316 4.848 92% 2.796 1.579 77%
22 BMW 9.031 6.338 42% 2.902 1.911 52%
23 Subaru 7.604 4.160 83% 2.594 1.065 144%
24 Land Rover 6.299 4 075 55% 1.754 1.066 65%
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Brand 2006 2005 Growth 06/05 Q1 2007 Q1 2006 Growth 07/06
25 Great Wall 4.788 4 070 18% 1.087 1.037 5%
26 Iran Khondro 4.534 - - 1.495 184 7
27 Ssang Yong 4.018 226 1678% 1.970 601 228%
Volkswagen Com- 3.402 1 904 79% 914 601 52% 28 mercial Vehicles
Mercedes-Benz 1.890 715 164% 845 507 67% 29 Vans
30 BYD 1.634 152 975% 269 336 -20%
31 Jeep 1.569 885 77% 482 212 127%
32 Fiat 1.382 93 1386% 3.982 8 -
33 Chrysler 1.381 837 65% 224 227 -1%
34 Porsche 1.320 525 151% 333 234 42%
35 FAW 1.288 - - 675 223 203%
36 Hafei 1.253 - - 258 - -
37 Dodge 1.068 - - 395 - -
38 Jaguar 893 522 71% 180 156 15%
39 Infiniti 729 - - 499 - -
40 MINI 496 340 46% 106 101 5%
41 Cadillac 416 251 66% 173 51 239%
42 Saab 383 241 59% 142 55 158%
43 Hummer 360 156 131% 116 26 346%
44 Alfa Romeo 54 68 -21% - - -
45 Chery NA NA - 6.656 551 1108%
Total 1.008.765 611.840 65% 295.469 170.258 74%
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 5.8 Sales by Car Models Q1 2006 to Q1 2007
Model Q1 2007 Q1 2006 Growth, %
1 Ford Focus 20.791 11.025 89%
2 Renault Logan 12.502 7.566 65%
3 Chevrolet Lanos 11.597 6.028 92%
4 Ford Fusion 10.881 2.099 418%
5 Toyota Corolla 10.345 4.685 121%
6 Chevrolet Niva 10.255 7.684 33%
7 Daewoo Nexia 10.170 10.890 -7%
8 Mitsubishi Lancer 10.131 9.051 12%
9 Hyundai Accent 8.688 8.535 2%
10 Chevrolet Lacetti 8.049 2.034 296%
11 Daewoo Matiz 6.863 4.383 57%
12 Mazda3 6.077 3.786 61%
13 Kia Spectra 5.528 3.812 45%
14 Nissan Almera 5.347 5.268 1%
15 Toyota RAV 4 5.058 2.346 116%
16 Chery Amulet 4.162 416 900%
17 Opel Astra 4 107 1.277 222%
18 Toyota Camry 4 081 2.039 100%
19 Toyota Avensis 3 834 2.290 67%
20 Hyundai Tucson 3 477 3.073 13%
21 Chevrolet Aveo 3 461 902 284%
22 Nissan Note 3 443 15 -
23 Suzuki Grand Vitara 3 205 1.119 186%
24 Fiat Albea 3 037 - -
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010
Model Q1 2007 Q1 2006 Growth, %
25 Mazda6 3.030 2.280 33%
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 6 Abbreviations
AEB Association of European Businesses in the Russian Federation ACEA European Automobile Manufacturers’ Association Bn. Billion CAGR Compounded Annual Growth Rate EU European Union F Forecast GDP Gross Domestic Product IAM Independent Aftermarket Mio. Million NAPI National Agency of Industrial Information No. Number OEM Original Equipment Manufacturer PC Passenger Car sq. km. Square Kilometre SUV Sport Utility Vehicle USD US-Dollar WTO World Trade Organisation
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Russian Automotive Market: Passenger Cars, Components and Spare Parts, 2006-2010 Globis is a market research and consulting company based in Berlin, Germany. We cover mature and developing automotive markets world-wide. Our services include: Market intelligence (reports, data, profiles). Mystery Shopping (sales and service) Vehicle stock audtis Network development services Entry strategies
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Globis Consulting, www.globis-consulting.com, Tel +49 (0)30 4005 4914 95